PMI announces €500 million investment in potentially reduced-risk product plant

Philip Morris International said today that it was investing up to €500 million in a manufacturing facility and associated pilot plant near Bologna, Italy, to produce its potentially reduced-risk tobacco products.

The combined annual production capacity of the factory and pilot plant is expected to reach 30 billion units by 2016.

“The development and commercialization of reduced-risk products represents a significant step toward achieving the public health objective of harm reduction, a potential paradigm shift for the industry, and an important growth opportunity for PMI,” said CEO André Calantzopoulos.

“This first factory investment is a milestone in our roadmap toward making these products available to adult smokers.

“This investment underscores our strong commitment to Italy and in particular to the Bologna region, which is not only home to our state-of-the-art filter factory, Intertaba, located in Zola Predosa, but also offers great infrastructure and, most importantly, access to exceptional human talent.”

Construction on the new facility is expected to begin immediately and take about two years.

Once fully operational it will employ up to 600 people.

The pilot plant, which is already near completion, will serve as the production facility for pilot and initial market launches.

“Importantly, the majority of the construction and manufacturing equipment will be procured from Italian companies and further benefit the country’s economy,” PMI said in a note posted on its website.

“PMI’s investment in the development and rigorous scientific assessment of products with the potential to reduce the risks of smoking spans more than a decade. It encompasses a wide range of tobacco and non-tobacco-containing product platforms. In November 2013 PMI announced its plans to accelerate commercialization of one of its potentially reduced-risk products in the second half of 2014 in selected cities, prior to a full market launch in 2015. Specific markets for product launches will be announced at a later date.

“Separately, PMI in December 2013 established a strategic framework with Altria Group Inc. under which Altria will make available its e-cigarette products exclusively to PMI for commercialization outside the United States. PMI plans to enter the e-cigarette market in the second half of 2014.”