Andre Calantzopoulos | Chief Executive Officer | Philip Morris International

Philip Morris International: Disrupting the Tobacco Industry and Leading the Way to a Smoke-Free Future

Philip Morris International (PMI) is undergoing a massive shift, transforming itself from a cigarette manufacturer into an innovative company fueled by science, data and technology. Its vision: to unsmoke the world.

Today, it is estimated that some 1.1 billion people worldwide smoke cigarettes and, despite all the efforts to get them to stop, the World Health Organization forecasts that around the same number will smoke in 2025.

It used to be that smokers had a binary choice: quit or continue to smoke. The vast majority chose the latter. Now, thanks to advances in science and technology, there’s a third option: switch to a smoke free alternative rather than continuing to smoke—one that is every bit as satisfying as cigarettes but that has the potential to present less risk.

PMI believes the best choice a smoker can make is to quit tobacco and nicotine entirely. But for those adults who would otherwise continue to smoke, the company has created a portfolio of scientifically substantiated smoke-free alternatives.

With 77,000 employees and a presence in more than 180 markets, the Fortune 500 company intends to transform not just its own business, but the entire tobacco industry. PMI envisions a future in which cigarettes are a thing of the past and is directing its efforts and resources toward achieving a smoke-free future as soon as possible.

Pioneering Product Transformation

The company transformation has been some time in the making. Recognizing the market potential for a better alternative for those adults who continue to smoke cigarettes, PMI began to invest many years ago in the technology and people required to bring these products to life. Since 2008, the company has invested more than $6 billion in researching, developing and commercializing its smoke-free portfolio. Vital to the effort has been the work of more than 400 scientists, engineers and technicians, who have developed a range of products that deliver a nicotine-containing vapor without combustion.

In 2016, PMI publicly announced its commitment to a future that is smoke-free. By 2018, 92 percent of its R&D budget was devoted to these alternatives, as was 60 percent of its total global expenditure on marketing, consumer engagement and trade activities. It continues to explore product advancements and now holds 4,600 patents worldwide related to its smoke-free ambitions. This is a significant statement of intent.

PMI is continuing to sell cigarettes as it transitions to its smoke-free future, reasoning that if it stopped their manufacture today, the world’s smokers would simply switch to other brands and behavior would not be changed. The goal is to entirely replace cigarette production with smoke-free products as soon as feasible, and factories are already being repurposed to that end. Since 2014, PMI has launched its smoke-free products in 51 of the 180 markets in which it operates, and that number is growing.

The Science behind the Transformation

The negative health impact of cigarettes is well known—but not everyone is aware that the greatest harm comes from the combustion. When a cigarette is lit, the tobacco burns at temperatures above 600°C/1000°F, generating smoke that contains high levels of harmful chemicals.

In contrast, PMI’s most advanced heated tobacco product (HTP), IQOS, heats the tobacco to much lower temperatures—up to 350°C/660°F—and releases an aerosol that contains nicotine at similar levels to cigarettes.

Laboratory studies reveal that, because the tobacco is heated rather than burned, the HTP emits on average 95 percent lower levels of harmful and potentially harmful constituents (HPHCs) compared with cigarettes. PMI has conducted 18 non-clinical and 10 clinical studies to date to evaluate and substantiate that switching completely to this product presents less risk of harm than continuing to smoke. Importantly, this does not mean HTPs are risk free, but PMI’s science shows that it is a much better choice than continuing to smoke.

There are hopeful signs that adults who otherwise would continue to smoke are willing to switch to this smoke free product. As of the end of September 2019, PMI estimates that approximately 8.8 million adult smokers in 51 markets have stopped smoking and switched to IQOS.

While heating tobacco is one possibility in developing better alternatives to cigarettes, another approach is to produce a nicotine-containing aerosol without the use of tobacco. PMI has also been developing the next generation of e-vapor technology, which takes a completely new approach to e-vapor generation, using a metallic mesh punctured with tiny holes to heat a prefilled, pre-sealed e-liquid cap.

PMI’s scientific assessment program follows a step-wise approach that emulates pharmaceutical industry standards and is in line with the draft guidance issued by the U.S. Food and Drug Administration (FDA). The company conducts its research in line with international standards and practices, such as the internationally accepted Good Laboratory Practices (GLPs) and Good Clinical Practices (GCPs).

Regulatory Support is Essential

Achieving a smoke-free future is a bold ambition, and PMI recognizes the importance of initiating conversations—with regulators, policy makers, NGOs, anti-tobacco organizations, health organizations and society as a whole—to challenge and overturn hardened opinions.

The company is appealing to regulators to recognize the life-changing role that smoke-free products have the potential to play in helping those adult smokers who would otherwise continue smoking to change to a better alternative. And it has opened up its science to help medical and other professionals better understand the promise of smoke-free alternatives. Following a rigorous two-year evaluation that involved in excess of 2 million pages of documentation, the U.S. FDA authorized the sale of IQOS in the United States earlier this year, having deemed the product “appropriate for the protection of the public health”. As well as reviewing our science, among several other key considerations, the FDA considered the risks and benefits to the population as a whole, including the relative health risks of the product, and the likelihood of changes in tobacco initiation and cessation rates before making their decision to grant a marketing order.

PMI holds the view that men and women who smoke shouldn’t be ignored—nor should they be denied access to better alternatives to cigarettes, including accurate information about them. These people should not be left in the dark.

However, the company can’t fulfil its smoke-free vision alone. This is why it is accelerating initiatives to open new conversations, appealing to all concerned to look at the science as the FDA did, rather than being led by emotion.

In 1997, some of PMI’s fiercest critics challenged the company to produce less-harmful products. The Company listened and accepted the challenge. Now, it is appealing to all those with influence to join it in helping the world’s estimated 1.1 billion smokers and bring about positive societal change.

Building Trust through Transparency

To encourage scrutiny of its science, PMI seeks independent verification of the data it generates on its smoke-free products. It has published more than 340 papers in peer-reviewed journals since 2008 and commissioned in-depth analysis of its science by independent experts. In addition, PMI’s INTERVALS

platform gives researchers access to industry data and the methods behind its published results, while the sbv IMPROVER platform encourages a crowdsourcing approach to verifying the industry’s research methods and concepts to advance the field of systems biology. To allow others to track the progress it is making toward creating a smoke-free future—and to hold the company to account—PMI has published a set of Business Transformation Metrics. The company’s stated aspiration is that by 2025:

  • Smoke-free products will represent more than 30 percent of total shipment volume and between 38 and 42 percent of total net revenues.
  • More than 40 million adult smokers will have switched to its smoke-free products and stopped smoking.

Reinventing its Ways of Working

To support its business transformation, PMI is reinventing the way it operates by enhancing its capabilities to ensure the organization is fit-for-purpose and at the leading edge of technology, science and user experience. This includes developing or acquiring new technical skills and implementing more agile, entrepreneurial structures and practices enabled by digitalization; developing new products and services not only through its internal resources but also through partnerships and acquisition; driving efficiency through every level of its operations; and building an inclusive workplace where diverse ideas and skills can deliver the innovations, creativity and disruption needed to drive its transformation.

PMI has built a consumer-centric business model to ensure it is always learning from and adapting to changing consumer demands. This model prioritizes regular engagement with adult smokers, retailers, customer care centers, after-sales support teams, and digital platforms and channels.

Commitment to Responsible Marketing

The responsible commercialization of tobacco- and nicotine-containing products is something PMI takes very seriously. The company’s marketing code sets out global standards applicable to all sales and marketing activities for its tobacco products. Among other standards, it only markets and sells to adult smokers and warns consumers about the potential health effects of its products.

PMI is clear that its smoke-free platforms are exclusively for adults who would otherwise continue smoking. They are strictly not for underage use. They are also not for former or “never” smokers to take up. In its statement regarding authorization, the U.S. FDA concluded: “Available data, while limited, also indicate that few non-tobacco users would be likely to choose to start using IQOS, including youth.”

PMI has set Good Conversion Practices, which serve as the bedrock of its engagement with adult smokers to support them on their journey toward a smoke-free future. PMI supports strict age limits for nicotine-product purchase, age verification at retail outlets and preemptive technology solutions. The company also supports regulation of tobacco- and nicotine-containing products, calling on all market participants to adhere to the same principles.

Unsmoking the World One Step at a Time

PMI accepts that the journey to a smoke-free future is a marathon, not a sprint. Its ultimate goal is to replace cigarettes entirely with smoke-free alternatives. Providing those adults who would otherwise continue to smoke with market-leading, science-backed alternatives to cigarettes and guiding them toward a smoke-free future is how PMI will achieve its goal.

Now, the company is calling on decision-makers and opinion leaders to join the cause. To lend their support to a public health revolution.

PMI is asking influencers and policymakers to help break down barriers preventing adult smokers from accessing smoke-free alternatives so that cigarettes can become a thing of the past.

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