Category: News This Week

PMI Details Views on Heated Tobacco

Photo: nagornyisergiy
Philip Morris International has published an overview of governments’ perspectives on heated-tobacco products on its website.
The piece touches on the situation in the United States, where the Food and Drug Administration in July 2020 granted modified-risk orders with reduced exposure information for the company’s IQOS system, and that in the United Kingdom, where Public Health England (PHE) releases a regular report on the evidence behind cigarette alternatives.
The fourth such PHE review, published in February 2018, included information on heated-tobacco products. The agency found that heated-tobacco products are likely to expose users and bystanders to lower levels of particulate matter and harmful and potentially harmful compounds than traditional products.
PMI looked at the situation in other countries too.
In Germany, the Federal Institute for Risk Assessment has analyzed the aerosol of IQOS tobacco-heating system and found reductions in selected toxicants compared to cigarette smoke. The study states that while further studies are required to address the magnitude of exposure reduction, the measured reductions “lead to the relevant questions of putatively reduced health risks.”
The Dutch Ministry of Health, Welfare and Sport in 2018 concluded that “The use of heatsticks with the IQOS is harmful to health but probably less harmful than smoking tobacco cigarettes” based on its aerosol chemistry measurements.
In April 2020, the Superior Council of Health in Belgium confirmed that the in vitro and in vivo studies show reduced exposure to harmful products and, subsequently, reduced subchronic toxicity after exposure to heated-tobacco products relative to conventional cigarettes.
A study by the Japanese Department of Environmental Health concluded that “The concentration levels of hazardous compounds in the mainstream smoke of IQOS are much lower than those in conventional combustion cigarettes.”
The Korean Ministry of Food and Drug Safety (MFDS) issued a statement on products that heat rather than burn tobacco based on measurements performed in its own laboratories of three heat-not-burn (HnB) products, including IQOS.
The MFDS results confirm significant reductions of harmful and potentially harmful constituents in HnB products compared to cigarettes—but doesn’t discuss them. Instead, MFDS mentions that HnB products also contain carcinogens, like benzopyrene and benzene. What it fails to mention is that the levels measured are more than 10 times lower compared to the levels present in cigarette smoke, according to PMI. The company’s public comment on the MFDS statement is available here.
July 14, 2021
Tobacco Smuggling Group Dismantled

Photo: Europol
The Portuguese National Guard and the Spanish National Police have dismantled an organized crime group involved in excise fraud and the smuggling of tobacco products, reports Europol.
During coordinated actions on July 7, authorities seized 8,000 kg of tobacco worth €2 million ($2.36 million) and 454,000 cigarettes with a value of €113,500. They also confiscated seven weapons, 24 vehicles and €216,000 in cash and bank deposits. Seventeen people were arrested.
The criminal network was involved in the illegal import of large quantities of tobacco leaves and strips from Spain into Portugal. This raw material served the illegal production of both cigarettes and tobacco for roll-your-own cigarettes distributed on the Portuguese black market.
Earlier, in mid-June 2021, Spanish authorities discovered and dismantled cutting and processing facilities. The tobacco processed there was shipped to Portugal where it was stored in different warehouses before being further distributed. Since the investigation was launched in May 2020, the Portuguese and the Spanish authorities have detained 23 individuals and seized about 1.8 million illicit cigarettes along with 11 tons of tobacco, all of which was worth about € 3.2 million.
Illicit trade in tobacco for roll-your-own cigarettes continues to be a widespread criminal trend in Portugal. Certain “cheap white” cigarette brands have become so popular on the black market that criminal networks have started to counterfeit them rather than smuggle them. This illegal activity generates millions of euros in profit for the involved criminal organizations.
While total cigarette consumption continues to decline, the share of illicit cigarettes in Europe increased by 0.5 percentage points to 7.8 percent in 2020, according to a recent study by KPMG.
July 13, 2021
Large Companies Likely to Dominate U.S. Vapor

Photo: bimserd
Large companies may soon dominate the U.S. vapor market while e-cigarettes produced by smaller companies may disappear, according to new research by ECigIntelligence.
Analysis of FDA premarket tobacco product applications (PMTAs) shows that more applications for simpler disposables and cigalike devices were submitted than applications for open systems. According to ECigIntelligence, the simpler products usually come from large companies while the open systems usually come from smaller businesses.
Only about 30 open system brands have filed PMTAs, implying that 85 percent of open system brands will be removed from the market, even if all 30 filed PMTAs are approved.
“This may indicate the discouragement nontobacco companies face when applying for PMTA approval,” said ECigIntelligence Managing Director Tim Phillips. “The PMTA process can be a grueling one for nontobacco companies without sufficient financial means or know-how. And if smaller brands are to become less prevalent in this category, consumers may soon only have the option of a few models provided by a handful of big companies.”
July 13, 2021
KT&G Recognized for Social/Ecnomic Merits

Lee Sang-hak (right), head of KT&G’s sustainable management division, during the award ceremony
(Photo: KT&G)
KT&G has been awarded a presidential commendation at the government award ceremony for the 2021 Social and Economic Merits organized by the Ministry of Strategy and Finance on July 2.
The award ceremony was held to discover successful business models in the field of social economy and to reward institutions and individuals who contributed to the realization of social values. KT&G won the presidential commendation in the social value realization category in recognition of its young startup support projects and assistance for the socially disadvantaged.
KT&G has been running the Sangsang Startup Camp since 2017 to discover and foster socially minded entrepreneurs who would like to make contributions in promoting environmental causes and providing jobs to the underprivileged. Up to this year, 97 startup teams have been produced through the fifth operation, of which 36 have been selected by the government for its entrepreneurship development projects. So far, the camp has recorded 745 employments and cumulative sales of about 19.8 billion won.
“With this award, our contribution to the revitalization of youth startups and efforts to realize social values have been recognized,” said Lee Sang-hak, vice president of KT&G and head of the sustainable management division, in a statement. “We will continue to support social and economic causes.”
July 13, 2021
Plain Packaging Impacted Smoking

Photo: Taco Tuinstra
Plain packaging has had a measurable impact on smoking rates in Australia, according to Melanie Wakefield, who heads the Center for Behavioral Research at the Cancer Council of Victoria and was also on the advisory group to government on plain packaging implementation.
Data from the National Drug Strategy Household Survey estimated about 11.6 percent of Australian adults smoke daily, down from 12.8 percent in 2016 and more than half the 25 percent who smoked in 1991.
Plain packaging was not the only reform introduced to help bring down the rate, however. Taxes on tobacco were upped by 25 percent in 2010 and then increased by 12.5 percent each year from 2013 to 2020.
Nonetheless, speaking with The Sydney Morning Herald, Wakefield estimates that plain packaging accounted for about a quarter of the total decline in smoking prevalence in three years after plain packaging, leaving Australia with about 100,000 fewer smokers as a result.
Importantly, she says, it has also had an impact on youth smoking rates.
“In the last national survey, only 5 percent of secondary school students had smoked in the last week, and that was down by a third from before plain packaging.”
In December 2012, Australia became the first country to require tobacco companies to sell their products in drab olive-brown boxes stripped of branding but featuring large pictures of smoking-related diseases.
Tobacco companies challenged the move in various courts, saying it not only breached trademark laws and intellectual property rights but would also boost black market sales. Libertarians characterized plain packaging as a “nanny state” measure.
Now, 20 countries, including the U.K., Turkey, France, Sweden, Belgium, the Netherlands and Ukraine, have brought in their own versions of plain packaging legislation.
July 13, 2021
Graphic Warnings Postponed to July 2022

Images: FDA
The U.S. Food and Drug Administration has delayed the effective date by which cigarette manufacturers will be required to print graphic health warnings on their products by three months to July 13, 2022, reports The Winston-Salem Journal.
It is at least the fourth delay for the graphic warning labels when counting previously set launch dates of June 18, 2021, Oct. 16, 2021, Jan. 14, 2022, and April 14, 2022.
The FDA released its final rule requiring new graphic warnings for cigarettes in March 2020. The rule calls for labels that feature some of the lesser known health risks of smoking, such as diabetes. The graphic warnings must cover the top 50 percent of the front and rear panels of packages as well as at least 20 percent of the top of advertisements.
In April and May 2020, cigarette manufacturers and retailers sued the FDA, arguing that the graphic warning requirements amount to governmental anti-smoking advocacy because the government has never forced makers of a legal product to use their own advertising to spread an emotionally charged message urging adults not to use their products.
In a more recent challenge, tobacco companies argued that the deadline was too onerous due to the impact of the Covid-19 pandemic. They also pointed to the risk that they would lose their investments in new packaging if the graphic health warning requirement were to be thrown out in court.
“These expenditures of resources for the purpose of meeting the rule’s requirements constitute irreparable harm because plaintiffs cannot recover money damages should the rule and/or the graphic warning requirement in the Tobacco Control Act be invalidated,” the companies said in a legal filing.
In March 2021, a district court judge in Texas granted a motion by the plaintiffs to postpone the effective date of the final rule to April 14, 2022. In May 2021, the court pushed back the final rule by an additional 90 days.
This is the Food and Drug Administration’s second attempt to enact graphic health warnings under the 2009 Family Smoking Prevention and Tobacco Control Act. The first rule was struck down by the federal court in the District of Columbia as a violation of the First Amendment.
July 11, 2021
Critics Astonished by PMI Pharma Deal

Photo: Ljupco Smokovski
Public health groups have reacted with astonishment to PMI’s takeover of Vectura Group, according to The Evening Standard.
“It’s ironic that a tobacco company wants to invest in the lung health industry when their products are the biggest preventable cause of cancer, including lung cancer,” said Cancer Research U.K. Chief Executive Michelle Mitchell.
“If PMI really wanted to help, they could stop aggressively promoting and selling their products altogether.”
Sources told The Evening Standard that the Vectura board had a “fiduciary duty” to recommend the offer to shareholders based purely on its value.
“PMI claims it holds more than a quarter of the global market for cigarettes, so its drive to become a ‘wellness company’ is a long way from fruition,” said Deborah Arnott, chief executive of Action on Smoking and Health.
“I can’t imagine the scientists working for Vectura, a respectable company making products that treat lung cancer, are going to be at all happy waking up to find they’re going to be working for Big Tobacco.”
Vectura declined to comment on what its employees might think about working for a tobacco company.
PMI says it is working on using the technology it has developed for its smoke-free products to help drug companies develop inhalable medicines.
PMI aims to generate $1 billion of net revenues from “beyond nicotine” products by 2025. Last year, total net revenues were $76 billion.
July 11, 2021
Philip Morris Makes Offer for Vectura Group
Photo: Art_Photo
Philip Morris International has made a £852 million ($1.2 billion) offer for Vectura Group, a provider of inhaled drug delivery solutions.
“PMI’s ‘Beyond Nicotine’ strategy, announced in February, articulates a clear ambition to leverage our expertise in inhalation and aerosolization into adjacent areas—including respiratory drug delivery and self-care wellness—with a goal to reach at least $1 billion in net revenues by 2025,” said PMI CEO Jacek Olczak in a statement.
“The acquisition of Vectura, following the recently announced agreement to acquire Fertin Pharma, will position us to accelerate this journey by expanding our capabilities in innovative inhaled and oral product formulations in order to deliver long-term growth and returns.”
“The market for inhaled therapeutics is large and growing rapidly, with significant potential for expansion into new application areas. PMI has the commitment to science and the financial resources to empower Vectura’s skilled team to execute on an ambitious long-term vision. Together, PMI and Vectura can lead this global category, bringing benefits to patients, to consumers, to public health and to society at large.”
Vectura is a provider of innovative inhaled drug delivery solutions that enable partners to bring their medicines to patients. The company has 13 key inhaled and 11 noninhaled products marketed by major global pharmaceutical partners as well as a diverse portfolio of partnerships for drugs in clinical development. In 2020, Vectura generated net revenues of £191 million. The transaction value represents a multiple of around 14 times Vectura’s 2020 EBITDA.

PMI has the commitment to science and the financial resources to empower Vectura’s skilled team to execute on an ambitious long-term vision.
Jacek Olczak, CEO, PMI
In a press note, PMI listed the benefits it expects to derive from the Vectura acquisition:
Access to differentiated proprietary technology and pharmaceutical development expertise to deliver a broad range of complex inhaled therapies.
The addition of highly complementary human capital, technology, high-quality infrastructure and deep know-how of inhalable formulation and device design development and analysis, drug/device combination and pharmaceutical management processes and systems. The combination will fully leverage PMI’s existing capabilities in life sciences, product innovation and clinical expertise.
An experienced management team—supported by more than 200 scientists in formulation, devices, inhalation, regulatory teams and clinical manufacturing—that will help PMI accelerate the development of its healthcare and wellness operations.
Together with the announced agreement to acquire Fertin Pharma, the acquisition will give PMI a comprehensive portfolio of development capabilities—covering innovative inhaled and oral product formulations—to fulfill its “Beyond Nicotine” ambitions in line with its key sustainability priorities.
PMI believes that, together, the companies can create a fully owned pipeline of products across a broad range of sectors in the prescription drug and over-the-counter categories that will complement Vectura’s CDMO business and service to its existing client base. PMI further believes that its “Beyond Nicotine” aerosolization technologies and development pipeline will provide additional predictability, stability and security for Vectura’s future.
In February of this year, PMI announced its goal to generate more than 50 percent of total net revenue from smoke-free products by 2025. PMI also announced its aim to generate at least $1 billion in net revenues by 2025 from “Beyond Nicotine” products.
“We are thrilled by today’s announcement and the prospect that Vectura will be joining the PMI family as an autonomous business unit, forming the backbone of our ‘Beyond Nicotine’ inhaled therapeutic business,” said Jorge Insuasty, chief life sciences officer. “The proposed acquisition will significantly accelerate our development efforts. With the addition of Vectura’s expertise in the inhaled therapeutics space, PMI and Vectura will have the opportunity to undertake together the development and eventual commercialization of innovative inhalable drug/device combinations.”
PMI will fund the transaction with existing cash and expects it to close in the second half of 2021, subject to a shareholder vote and approval by the appropriate regulatory authorities. PMI expects the impact of the acquisition on its full-year 2021 adjusted diluted EPS to be immaterial.
July 9, 2021
Groups Urge Ban on ‘Menthol Replacements’

Photo: Валерий Моисеев
Public Health England and other health groups have asked the U.K. government to prohibit the sale of “menthol replacement” cigarettes such as NewSuperking Green and Sterling New Dual, reports Express.
Despite a nationwide ban in the U.K. on the sale of menthol cigarettes, Japan Tobacco International has sold more than £1 billion ($1.33 billion) worth of cigarettes laced with menthol in the past year since the ban went into effect, according to critics.
JTI insists its brands comply with the law. “We no longer sell cigarettes with characterizing flavors (including flavored capsule cigarettes),” the company stated. “Cigarettes with a characterizing menthol flavor have been banned from May 20, 2020. We are confident all our products are fully compliant with U.K. law. Some JTI cigarettes and rolling tobacco sold in the U.K. do still contain very low levels of menthol. This is not prohibited under the law, provided the use of such flavorings does not produce a clearly noticeable smell or taste other than one of tobacco—which they do not.
“The launch by competitors of similar products in EU markets shows they, too, are confident that products with low levels of menthol are permitted by law. All the ingredient information for our new products was shared with the authorities at both U.K. and EU level via the EU Common Entry Gate (EU-CEG) prior to their being placed on the market, so there is full transparency throughout this process. We look forward to providing further information if requested by the authorities.”
Tobacco companies across Europe have been introducing alternatives to their discontinued menthol brands since the EU banned such tobacco products in May 2020. Last year, cigarette manufacturers came under scrutiny in Ireland for supposedly sidestepping the measure.
July 9, 2021
Altria to Sell Ste. Michelle Wine Estates

Photo: InsideCreativeHouse
Altria Group has agreed to sell its Ste. Michelle Wine Estates business to Sycamore Partners Management for approximately $1.2 billion and the assumption of certain Ste. Michelle liabilities. Altria’s net cash proceeds will be subject to customary net working capital and other adjustments at closing.
Altria expects the transaction to close during the second half of 2021, subject to Sycamore Partners obtaining the necessary financing and the satisfaction of customary closing conditions, including antitrust regulatory clearance.
“We believe the transaction is an important step in Altria’s value creation for shareholders and allows our management team greater focus on the pursuit of our vision to responsibly transition adult smokers to a noncombustible future,” said Altria CEO Billy Gifford in a statement. “Ste. Michelle and its talented employees have built an outstanding portfolio of premium wine brands, and we wish them future success.”
“The Ste. Michelle leadership team and I look forward to working with the team at Sycamore Partners and believe we are well positioned to drive the next phase of our growth,” said David Dearie, Ste. Michelle’s president and CEO.
July 9, 2021