This article first appeared in The Edge Malaysia Weekly on December 18, 2023 - December 24, 2023
RECOGNISING the declining sales of its combustible cigarettes, Philip Morris International Inc (PMI), which makes Marlboro, L&M, Bond Street, Chesterfield and Sampoerna A, is ramping up its efforts to promote smoke-free alternatives.
PMI, the world’s top tobacco company by market value, has come a long way towards creating a “smoke-free future” free of combustibles. It has invested more than US$10.7 billion since 2008 in research, product development and production capacity for its smoke-free alternatives. Its most notable heated tobacco product (HTP) is iQOS, which has helped put PMI in a good position to move away from conventional cigarettes.
In a recent media briefing at PMI’s Research and Development (R&D) Cube in Neuchatel, Switzerland, company officials said there are now more than 27 million iQOS users worldwide, of which 72% are smokers who have switched to iQOS and said goodbye to cigarettes. That is a 50% jump from 18 million iQOS users in late 2020.
To date, the group has sold its HTPs in more than 80 markets, according to PMI global communications director Bryson Thornton. “Our target is to have two-thirds of the group’s revenue contribution from smoke-free products by 2030. Smoke-free products contributed more than one-third of our revenue in 2022.”
He says 2022 and 2023 marked two consecutive years of volume growth for PMI, as well as an organic net revenue increase of more than 7% for smoke-free products. “Since 2008, we had already started working on developing less harmful alternatives to cigarettes, products that do not create smoke because they do not combust.”
The growth trajectory for iQOS has been impressive. This can be seen from the shipment volume of heated tobacco units — the consumable element of its smoke-free products — which has risen from seven billion in 2016 to 109 billion in 2022.
Its cigarette shipment volume, meanwhile, has fallen from 915 billion units in 2011 to 622 billion units in 2022.
Third-quarter 2023 numbers show that HTPs contributed 36%, or US$3.3 billion, to the group’s revenue of US$9.1 billion. The group also said in its financial statement that this was the first time it had recorded more than US$9 billion in quarterly net revenue, driven by the strong IQOS performance.
The quarterly performance was also supported by an 18% growth in its heated tobacco shipment volume and a 9% increase in cigarette pricing.
At present, PMI’s share of the global cigarette market stands at 24.2%, while its share of the global HTP market is 4.6%.
iQOS was introduced in 2014, with its first city pilot in Japan, which has the highest number of HTP users in the world. It was introduced in Malaysia in 2018.
The group recently launched its zero-tobacco stick for use with its iQOS device, called iQOS Illuma. Essentially, the iQOS device heats up small packets of ground tobacco resembling cigarettes without combustion, fire, ash or smoke, a process that the company says could result in a lower health risk compared with normal cigarettes.
“Nicotine is not the primary cause of smoking-related diseases. It is primarily the toxins and carcinogens in tobacco smoke that cause illness,” Thornton says.
He points out that there are more than one billion smokers in the world who should be encouraged to switch to safer products. “But for those adult smokers who would otherwise continue smoking, we want to provide them with access and information about smoke-free alternatives.”
The US Food and Drug Administration has authorised PMI to market iQOS as offering reduced exposure to harmful chemicals compared with smoking cigarettes, though the World Health Organization says that reducing exposure to harmful chemicals in HTP does not render them harmless, nor does it translate into a reduced risk to human health.
PMI senior manager of global scientific engagement Carrie Wade says the company’s R&D section has more than 1,500 employees, which includes scientists and engineers, who are developing safer alternatives to traditional cigarettes.
She adds that independent studies have shown a more than 95% reduction in the levels of chemicals found in HTPs compared with traditional tobacco cigarettes that are burnt to release the nicotine.
The findings, Wade says, are supported by the assessments of 11 government agencies and more than 550 independent research publications on HTPs.
Nonetheless, while there has been an increasing adoption of HTPs and smoke-free products, which include vape and tobacco pouches, regulations remain a challenge as each country has a different stand depending on the harm the product produces. This is especially so as an increasing number of youth are taking up vaping.
For instance, countries such as Singapore, Thailand and Hong Kong have banned e-cigarette products including HTPs. The European Union, meanwhile, has banned flavoured HTPs, as part of a plan to minimise tobacco use across the bloc by 2040.
In the Philippines, a law was passed last year to establish a risk-proportionate regulation of non-combustible alternatives to cigarettes.
Back home, the Malaysian government removed the generational-end-game (GEG) provisions from the revised Control of Smoking Products for Public Health 2023 Bill, which was tabled and passed by the Dewan Rakyat in early December.
The rationale for removing the GEG component, according to former health minister Dr Zaliha Mustafa, was to accelerate the legislation of the revised bill and enact regulatory control over tobacco and vape products and discourage their use by minors.
In January 2021, the government had imposed a 10% excise duty on all cigarette devices, both electronic and non-electronic.
At the E-Cigarette Summit UK, held at the Royal College of Physicians in London in November, Universiti Kebangsaan Malaysia professor of hospital management and health economics and deputy dean Dr Sharifa Ezat Wan Puteh reportedly urged the government to develop regulations that would take into consideration the harm reduction potential of e-cigarette products.
“If you don’t smoke, you should not vape. The best is not to use anything, clean air. But if you are hooked on smoking, then you should switch to a safer alternative.
“Multiple independent data from local and international research show that vaping has been proven to be less harmful than smoking and is effective in assisting smokers to quit,” she said.
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's App Store and Android's Google Play.