Philip Morris To Introduce Lower-Risk Cigarettes By 2017

By Thomas Mulier – Jun 21, 2012 9:53 AM E

Philip Morris International Inc. (PM), the world’s largest tobacco company, said it plans to sell a new type of cigarette that poses lower health risks by 2017.

The company is developing three products that would be sold under existing brands such as Marlboro, and the most advanced is a cigarette that heats tobacco rather than burning it, Chief Operating Officer Andre Calantzopoulos said in a speech prepared for a meeting today with investors in Lausanne, Switzerland.

Tobacco companies have spent decades trying to develop a safer alternative to smoking.

“We are on the eve of what we all believe could be a paradigm shift for our industry,” Chief Executive Officer Louis Camilleri said in a speech. The new products have “the very real potential to not only be a game-changer, but also be the key to unlock several hitherto virgin territories, most notably the huge Chinese market.”

Tobacco companies have spent decades trying to develop a safer alternative to smoking, including a 1988 test of Premier, a heated-tobacco smokeless cigarette that its maker, now calledReynolds American Inc. (RAI), dropped in about a year.

“PMI are far more advanced than I had expected,” said Erik Bloomquist, a London-based analyst at Berenberg Bank.

‘Most Promising’

The “most promising” lower-risk products would heat tobacco or generate aerosol that consumers inhale, New York- based Philip Morris said. The heated-tobacco device is ready for clinical testing, and manufacturing of lower-risk cigarettes would start in three to four years, Calantzopoulos said.

A second product under development would be lit with a normal lighter, while a third uses a chemical reaction to make an aerosol that contains nicotine.

“We have to remain, however, alert to the fact that there may be bumps in the road, given the many complexities of this undertaking,” Calantzopoulos said.

Philip Morris said today that it’s cutting its full-year earnings forecast to $5.10 to $5.20 a share, from a prediction in April of $5.20 to $5.30, because of the strength of the dollar against other currencies.

Philip Morris fell 1.3 percent to $87.38 at 9:45 a.m. in New York. The shares advanced 13 percent this year through yesterday.

To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

http://www.bloomberg.com/news/2012-06-21/philip-morris-to-introduce-next-generation-cigarette-by-2017.html

Interesting information – What are your thoughts?

4 comments ↓

#1 Miami Heat on 06.26.12 at 10:25 PM

Big tobacco has the time and has the money. But in the US the decline of traditional cigarettes might make this a little more urgent for Altria.

#2 Cardinal Fan on 06.30.12 at 10:09 AM

2017??????

#3 Candy Girl on 07.12.12 at 9:30 AM

This is an example of what used to be called “vapor-ware” in the software industry/ Back before the advent of apps and the cloud- Microsoft could significantly stem the tide of capital to innovative, new software and its developers by announcing that they had something better coming in two to three years. PM is attempting to forestall innovation, research and development by announcing that they’ve got something better in the works. In the meantime, innovators in less harmful nicotine and tobacco solutions will have to explain how what they are doing will survive an marketing and merchandising onslaught by PM five years down the road. It’s what the big guys do when they’ve run out of ideas and options.

#4 Custom Blends on 07.29.12 at 7:01 PM

Tobacco, real true tobacco, has biological characteristics that interact with the human being that cannot be replicated.
No matter how many ways there are to satisfy a nicotine craving, there will alway be a demand for true all natural tobacco because it fits into the human experience.
Mark

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