Philip Morris’s Cigarette Alternative Could Hit U.S. in 2017

Pushing ahead even before health regulators deem it safer than traditional smokes, Philip Morris International Inc. is all set to run a test the market for its iQOS device with a U.S. rollout as soon as next year.

The iQOS device is the most advanced product to come out of its multi-billion dollar push to develop cigarette alternatives.

Chief Executive Officer Andre Calantzopoulos said in an interview Wednesday at the company’s offices in Lausanne, Switzerland said that IQOS could be released as soon as the U.S. Food and Drug Administration gives approval for it to be sold.

IQOS heats tobacco without setting it on fire. A longer FDA vetting process that might allow it to claim the product is less harmful than traditional cigarettes will not be undertaken by the company at present as Philip Morris will move forward without waiting for it.

“That’s currently the plan. ,” Calantzopoulos said.

“It’s good to be in the market because it’s only when you are in a specific market that you learn” about consumers and product acceptance in that particular place, he said.

He said that as the company waits to see if the FDA will allow it to make any health claims, gaining such insight is necessary.

As smoking rates decline in developed nations and regulatory burdens such as plain packaging advance, Bottom of Form

Philip Morris and its industry rivals — British American Tobacco Plc, Reynolds American Inc. and Japan Tobacco Inc. — are racing to develop cigarette alternatives. According to Exane BNP Paribas analyst James Bushnell, Philip Morris is ahead of the competition so far.

Bushnell has said that iQOS is “the closest yet that the industry has got to the holy grail of a commercially successful ‘safe’ cigarette.”

What’s known as a premarket tobacco application would be fined by New York-based Philip Morris early next year. That’s required for any tobacco product introduced after February 2007. It rules on such cases within 180 days, the FDA has said.

To be able to designate that the product is less harmful than traditional cigarettes, the company is also filing a so-called modified risk application by the end of this year. it would take at least twice as long as the premarket filing for the FDA to respond for that application, which currently is between 2 million and 3 million pages.

Through a licensing agreement between the two companies, which used to be one entity, Altria Group Inc. will sell the product in the U.S. IQOS is currently available in 10 cities and is on track to enter 10 more in different countries by year-end.

Chief Financial Officer Jacek Olczak said in an interview that excluding research that was done before its split from Altria in 2008, the company has spent more than $3 billion dollars to date on developing the portfolio. $700 million to $1.2 billion to earnings by 2020 is expected to be added by the Marlboro maker from the new portfolio.

IQOS comprises of tubes of tobacco called HeatSticks, which resemble a cigarette cut in half, are heated up in a rechargeable electronic device.

(Adapted from Bloomberg)

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