Tag: Philip Morris International

Quebec to Help Medicago Cut PMI Ties

Photo: Leigh Prather
The government of Quebec wants to help Medicago replace its shareholder Philip Morris International with another investor so that the biotech firm can distribute its Covifenz Covid-19 vaccine internationally, reports CTV News.
In February, Health Canada approved Covifenz, a tobacco plant-based coronavirus vaccination developed by Medicago and GlaxoSmithKline, for adults aged 18 to 64. In December 2021, the company said its two-dose vaccine was 71 percent effective in preventing Covid-19 infections, according to a large study that included several variants.
However, in May, the World Health Organization rejected Covifenz, citing Medicago’s firm’s links to PMI, which owns 21 percent of Medicago shares. Article 5.3 of the WHO Framework Convention on Tobacco Control obliges parties to ensure that their policies are protected “from commercial and other vested interests of the tobacco industry.”
The Canadian government has signed a contract to purchase up to 76 million doses of Covifenz. Canada had planned to donate any excess vaccines to low-income countries through the Covax vaccine-sharing alliance. Since the WHO has denied Medicago’s request, Canada will not be able to donate doses of Covifenz.
Quebec Economy Minister Pierre Fitzgibbon has been talking with Medicago’s other shareholder, Mitsubishi Tanabe Pharma, about the possibility of buying out PMI. Mitsubishi has asked the Quebec government for support so that Medicago’s vaccines “can receive a favorable reception from the WHO and be marketed on a large scale,” according to a recent entry in the Quebec Registry of Lobbyists.
Canadian health groups applauded the efforts to replace PMI as a major shareholder.
“Philip Morris’s involvement in Medicago is the main obstacle to widespread international distribution of the plant-based Covid-19 vaccine,” said Flory Doucas of the Quebec Coalition for Tobacco Control in a statement. “Medicago has previously signaled that alternative investors would help facilitate this outcome. Quebec’s intentions to buy out Philip Morris’s shares from Medicago is the logical path to the eventual approval for this vaccine by the World Health Organization.”
June 21, 2022
Jury Awards PMI $10.7 Million in Patent Case

Photo: md3d
A U.S. jury awarded Philip Morris International $10.7 million on June 15 after finding that R.J. Reynolds Vapor Co.’s Vuse e-cigarettes violate its patent rights, reports Reuters.
The federal court jury in Alexandria, Virginia, said RJR’s Vuse Solo and Alto devices infringe two PMI patents covering parts of a vaping device for heating substances and preventing leaks. At the same time, the jury cleared Vuse Alto of infringing one of the patents.
A Philip Morris spokesperson told Reuters the company was “grateful” for the verdict, which “rejects an attempt by BAT to free-ride on our hard work and investment.”
A spokesman for RJR indicated it may appeal the June 14 verdict.
The case is part of a multi-front patent dispute between PMI and RJR parent company British American Tobacco.
The recent verdict concerned counterclaims in RJR’s ongoing patent lawsuit over PMI’s IQOS heated-tobacco device. RJR won an order blocking IQOS imports at the U.S. International Trade Commission last November.
PMI succeeded earlier this year in invalidating parts of some patents RJR accused it of infringing at a U.S. Patent Office tribunal.
BAT has also sued PMI over IQOS in the United Kingdom, Germany and elsewhere. A PMI filing with the U.S. Securities and Exchange Commission earlier this year said IQOS patent lawsuits and challenges outside of the U.S. have “repeatedly and universally failed.”
Altria has separately sued RJR for patent infringement in North Carolina over the Vuse line, in another case that is still pending.
June 16, 2022
Kaival and PMI Sign Distribution Agreement

Photo: khwanchai
Kaival Brands Innovations Group, the U.S. distributor of all products manufactured by Bidi Vapor, has reached an agreement with Philip Morris Products (PMP), a wholly owned affiliate of Philip Morris International, for the development and distribution of electronic nicotine-delivery system (ENDS) products in markets outside of the U.S., subject to market (or regulatory) assessment.
The company’s recently formed wholly owned subsidiary, Kaival Brands International (KBI), entered into a licensing agreement with (PMP) on June 13, 2022. The agreement grants to PMP a license of certain intellectual property rights relating to Bidi Vapor’s premium ENDS device, known as the Bidi Stick in the U.S., as well as potentially newly developed devices, to permit PMP to manufacture, promote, sell and distribute such ENDS device and newly developed devices in international markets outside of the U.S.
The parties believe this agreement promotes their joint vision of a smoke-free future.
“We believe that in addition to the Bidi Stick having wide acceptance among legal-age nicotine users in the United States, Bidi Vapor’s numerous decisions around design; responsible adult-oriented marketing and stringent youth-access prevention measures; and sustainability bolstered its appeal to PMI,” said Niraj Patel, CEO of Kaival Brands, in a statement.
“We, along with PMI and Bidi Vapor, share the vision of a smoke-free future. The Bidi Stick offers legal-age nicotine users a high-quality alternative to cigarettes that satisfies their taste preferences. Further, we, along with Bidi Vapor, are committed to prioritizing the appropriate regulation and responsible commercialization, inclusive of taking the necessary measures to make sure these products do not appeal to unintended audiences, including youth. By example, Bidi Vapor does not engage in direct online sales to consumers and requires age verification contracts with our distributors and retailers.
“While Bidi Vapor continues to pursue the U.S. Food and Drug Administration premarket tobacco product authorization, cooperation with a major multinational company like PMI, a leader in scientifically substantiated smoke-free products, opens doors on a global scale. Kaival Brands looks forward to a long, productive relationship with PMI to accelerate the end of smoking.”
“We have previously mentioned our intention to broaden our current smoke-free product portfolio for adults who would otherwise continue to smoke cigarettes or use other nicotine products. This agreement supports that vision and is another step toward accelerating the delivery of a smoke-free future. We are excited to start our agreement with Kaival Brands—led by CEO Niraj Patel—who shares the same vision as we do, to accelerate the end of combustible cigarette smoking,” says PMI President of E-Vapor Ashok Rammohan.
June 14, 2022
PMI Publishes ESG Protocol

Photo: Deemerwha studio
Following the introduction of PMI’s Sustainability Index, Philip Morris International made its ESG KPI Protocol publicly available. This document describes how the Sustainability Index will measure PMI’s progress toward reaching the goals outlined in its 2025 Roadmap and provides details about the 19 metrics that comprise PMI’s Sustainability Index. This announcement follows the release of PMI’s Integrated Report 2021, which includes details of the company’s Sustainability Index and the 2022 Proxy Statement, which provides details on how long-term executive compensation is linked to the company’s 2025 Roadmap through the Sustainability Index.
The ESG KPI Protocol is a separate, dedicated explanation of the Sustainability Index’s mechanics. It includes the definition, methodology and scope of each of the Sustainability Index’s KPIs to provide measurable, verifiable, consistent and accurate reporting on progress.
Through publication of its ESG KPI Protocol, PMI aims to provide further transparency on the key metrics used to measure how the company is progressing toward achieving its purpose and creating value for shareholders and other stakeholders. Further, the ESG KPI Protocol establishes a framework, which is specific to the company, and clearly defines KPIs that can provide the organization with a method for making the connection between the company’s purpose, strategic direction, financial performance and environmental and social considerations.

We developed a clear process for establishing concrete definitions, documentation and controls for sustainability with the aim of standardizing how we measure ESG performance.
Jennifer Motles, chief sustainability officer, PMI
“As sustainability matures and gains importance inside and outside our company, the question of how to measure ESG performance is something many continue to grapple with. Accordingly, we developed a clear process for establishing concrete definitions, documentation and controls for sustainability with the aim of standardizing how we measure ESG performance,” said Jennifer Motles, chief sustainability officer, in a statement.
Additionally, PMI published its 2021 ESG Highlights—a data-driven document based on the company’s 2021 Integrated Report and tailored to complement investor relations materials. It aims to further strengthen investor engagement and understanding of the relevance and robustness of PMI’s sustainability strategy and transformation.
June 9, 2022
Thai Court Lowers Philip Morris Fine

Photo: Jo Panuwat
An appeals court in Thailand has lowered a fine imposed on Philip Morris (Thailand) for customs violations to THB121 million ($3.53 million), reports The Bangkok Post.
In November 2019, the country’s criminal court found the tobacco giant guilty of evading taxes due on cigarette imports from the Philippines and ordered the company to pay a fine of THB1.2 billion.
While upholding the guilty verdict, the appeals court on June 1 lowered the fine and instructed authorities to pay rewards to those who provided tips leading to the arrests.
The prosecutor filed a lawsuit against Philip Morris (Thailand) and seven of its employees in 2016 for inaccurate price declarations on cigarettes imported from the Philippines from July 2003 to June 2006. The defendants denied the charges.
According to the lawsuit, Philip Morris (Thailand) set the price of L&M cigarettes imported from the Philippines at THB5.88, while other importers declared the same brand of cigarettes at THB6.81 per packet.
The tobacco firm allegedly also declared the cost, insurance and freight rate on Marlboro from the Philippines at THB7.76 per packet, far lower than the THB27.46 reported by other importers.
June 6, 2022
PMI Calls for Action Against Illicit Trade

Photo: promesaartstudio
Philip Morris International has called for action against the illicit cigarette trade in Saudi Arabia, reports Arab News. Illicit trade currently accounts for between 17 percent and 25 percent of the tobacco market in Saudi Arabia.
Philippe Van Gils, PMI’s regional head of illicit trade prevention for the Middle East, warned that the illegal tobacco trade poses a risk not only to government revenues, but also to public health.
“Billions are going into the pockets of illicit organizations instead of the governments where the latter could use the money for development and other purposes,” Van Gils said, adding that illicit traders also neglect sanitary standards in manufacturing or shipping
Van Gils stressed the importance of building awareness of the issue in the private sector and among consumers. He said that collaboration is crucial due to the magnitude of the problem. “No one can fix this issue alone; it requires a public-private partnership,” he said.
He further said that the private sector could address this issue using technology and better controls on its supply chain operations. “It’s about knowing your customers, monitoring the volume of products you sell to ensure it responds to legitimate demand and leveraging technology to track your product down the supply chain,” he said.
Governments, in turn, should not only enact effect regulation, but also enforce it. To help authorities distinguish illicit products from genuine ones, PMI has held several training sessions this year, including for the Saudi Authority for Intellectual Property.
According to Van Gils the Covid-19 pandemic accelerated illicit trade on the dark web. He said the solution is to reduce illicit tobacco while promoting better alternatives, specifically heated tobacco products such as e-cigarettes.
“Our position is that if you don’t smoke, don’t start. But if you can’t quit, switch to better alternatives that are now available thanks to technological advancements,” added Van Gils.
June 6, 2022
PMI Reaches Gender Balance Goal

Photo: Tobacco Reporter Archive
Philip Morris International has reached its global company-wide target to improve gender balance, ensuring at least 40 percent female representation in managerial roles by 2022, according to a company press release.
Jacek Olczak, CEO at PMI, commented, “I am immensely proud of PMI’s vision, commitment and achievement in ensuring equal opportunities are given to all in the workplace, irrespective of gender. Meeting this target demonstrates that our inclusion and diversity strategy is working. Diverse profiles, backgrounds and perspectives allow us to make better and more considered decisions as well as contribute to better and more sustainable performance. I firmly believe that a culture of fairness, inclusion and diversity [is] crucial to PMI’s progress in achieving a smoke-free future and will continue to benefit the company as we become more reflective of our consumer base.”
“What gets measured really does get done,” said Silke Muenster, chief diversity officer. “This was a whole company effort requiring everyone to take responsibility. I am delighted that we have met our target on time but recognize that we still have a long way to go on our diversity, equity and inclusion journey. With this in mind, we have our next gender representation target: 35 percent of women in senior roles by 2025.
“Having a truly diverse workforce is an essential part of our goal to achieve a smoke-free future. I am very proud of the progress we have made to date, and I am confident about achieving more in the future.”
PMI has also been recertified as a global EQUAL-SALARY organization for the second time since 2019 by the independent EQUAL-SALARY Foundation. The recertification verifies that PMI continues to pay female and male employees equally for equal work in the more than 90 markets where PMI operates.
The EQUAL-SALARY Foundation is an independent, nonprofit organization based in Switzerland. The EQUAL-SALARY certification verifies that organizations have sustainable policies and practices to ensure that they pay their male and female employees equally for equal work.
May 12, 2022
Swedish Match Accepts PMI’s $16 Billion Offer

Photo: Swedish Match
Swedish Match’s board of directors has accepted Philip Morris International’s offer of SEK161.2 billion ($16.14 billion), according to The Wall Street Journal. The deal is subject to shareholder approval.
PMI hosted a live audio webcast today to discuss the offer. An archived copy of the webcast will be available at www.pmi.com/investors until 5 p.m. ET on June 9, 2022.
“We are pleased to announce this exciting next step in Philip Morris International’s and Swedish Match’s trajectory toward a smoke-free future,” said PMI CEO Jacek Olczak in a statement. “Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion—strengthened by complementary geographic footprints, commercial capabilities and product portfolios—and open up significant platforms for growth in the U.S. and internationally.
“Swedish Match’s dedicated employees and management have steadfastly pursued the company’s vision of a world without cigarettes while delivering very strong results. We look forward to building upon this success and joining forces to accelerate our shared smoke-free mission.”
In 2016, PMI announced its new mission to replace cigarettes with science-based, less harmful alternatives as soon as possible, and the company says it has made considerable progress toward that goal. While in 2015, essentially all of PMI’s net revenues came from cigarettes, last year nearly 30 percent came from smoke-free products. By 2025, PMI aims to be a predominantly smoke-free company, with more than half of its net revenues coming from such products. PMI says it has built world-class scientific assessment capabilities, notably in the areas of preclinical systems toxicology, clinical and behavioral research as well as postmarket studies.

Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion.
Jacek Olczak , CEO, PMI
Swedish Match embarked on its smoke-free journey two decades ago, starting with its decision to divest its cigarette business. PMI says it values how Swedish Match has relentlessly pursued tobacco harm reduction through its range of smoke-free products; received authorizations for its products via strict regulatory pathways in the U.S.; and reshaped the public health environment in countries such as Sweden and Norway.
“As PMI continues to evolve its business for the long term, it believes that the two companies would be a perfect pairing of strategic vision, culture and enterprise,” PMI wrote in a press note. “Together, the companies would be able to create a global, science-led smoke-free champion, combining expertise in heated tobacco and oral nicotine—including multiple MRTP [modified-risk tobacco product] authorizations—as well as PMI’s emerging presence in e-vapor products, to switch more adult smokers to better alternatives than the two could achieve as separate companies. Swedish Match would lead the combined company’s oral nicotine business.”
Financial analysts confirmed the deal has strategic merit, citing Swedish Match’s access to the lucrative U.S. market. Cigarette sales have been declining almost unabated for years because of the health hazards and the stigma attached to smoking. Meanwhile, “modern oral” products, such as nicotine pouches and lozenges, are driving growth in the oral tobacco category, which includes traditional chewing tobacco and moist snuff. Swedish Match’s Zyn pouch leads the U.S. modern oral category with a volume market share of 64 percent in 2021.
According to PMI, the combination would immediately enhance PMI’s already strong growth profile and support additional opportunities in the U.S. and internationally over time. It is also expected to be accretive to adjusted diluted earnings per share before any synergies and excluding transaction-related costs as well as the amortization of acquired intangibles. Swedish Match’s operating cash flow comprises meaningful U.S. dollar net income, thereby improving PMI’s currency profile.
From January through March 2022, Swedish Match’s sales and operating profit from product segments increased on the back of continued strong momentum for the U.S. smoke-free business, according to the company’s interim report.
Group sales increased by 10 percent to SEK4.89 billion ($492.05 million). In local currencies, sales increased by 2 percent for the first quarter.
Operating profit from product segments increased to SEK2.12 billion. In local currencies, operating profit from product segments decreased by 7 percent for the first quarter.
Profit after tax amounted to SEK1.49 billion.
PMI says it intends to preserve and develop Swedish Match’s operational presence in Sweden, where much of the company’s skills base is located, as well as in Richmond, Virginia, the site of the head office for Swedish Match’s U.S. Division. PMI has no plans to divest Swedish Match’s Lights business.
May 11, 2022
PMI Mulls Offer for Swedish Match

Photo: SecondSide
Philip Morris International and Swedish Match confirmed that they are talking about a possible offer by PMI for Swedish Match.
“The discussions are in progress, and it is uncertain whether an offer will be made,” PMI wrote in a statement. “PMI intends to make no further comment regarding the discussions unless and until it is appropriate to do so.”
“There can be no certainty that an offer will be made,” Swedish Match wrote in a press note.
The statements were made in response to market speculation, first reported in The Wall Street Journal, about a possible deal.
Swedish Match has a market capitalization of SKR120.92 billion ($11.99 billion), and Philip Morris is valued at about $154 billion.
Financial analysts said a deal has strategic merit for PMI given the attractive U.S. market. The U.S. is the world’s most lucrative nicotine market, with strong and highly predictable cash flows.
Morgan Stanley said that purchasing Swedish Match could accelerate PMI’s smoke-free transition. “Swedish Match is one of the few larger scale tobacco assets with a meaningful smoke-free business and attractive growth profile,” the investment bank wrote in a note to investors. Morgan Stanley believes Swedish Match could increase PMI’s smoke-free revenue from 29 percent in 2021 to 44 percent by 2025.
PMI aims to generate about 50 percent of its revenue from smoke-free product by 2025.

Purchasing Swedish Match could accelerate PMI’s smoke-free transition. (Photo: Swedish Match)
Goldman Sachs, too, was enthusiastic about the opportunities presented by a possible tie-up. A deal would provide PMI access to the fast-growing and high-margin U.S. oral nicotine pouch category, in which Swedish Match’s Zyn is the market leader, with a volume share of 64 percent in fiscal 2021. Goldman Sachs expects the U.S. nicotine pouch category to reach $4 billion retail sales value by 2025.
What’s more, buying Swedish Match would provide PMI with a platform to bring its Veev vapor product to the U.S. once approved by the Food and Drug Administration. This would be beneficial because PMI’s current partner, Altria Group, is unable to distribute Veev in the U.S. due to its stake in Juul Labs.
Purchasing Swedish Match would also provide PMI with potential distribution for IQOS in the U.S. and allow it to capture the product’s full revenue and margins in the event that Altria loses the right to distribute IQOS, according to Goldman Sachs. Altria’s IQOS distribution deal expires in April 2024, but PMI and Altria currently disagree about whether Altria has thus far met the milestones to earn the renewal option for an additional five-year deal.
The U.S. currently bans IQOS imports following an intellectual property dispute with BAT.
Acquiring Swedish Match would also provide PMI with a move diversified geographic exposure, reducing the impact of swings in currency exchange rates.
While considering a potential deal positive for PMI, Goldman Sachs says it could be potentially negative for Altria as PMI could evolve from a partner to a formidable competitor on Altria’s home turf. Morgan Stanley said it would also make the long-mulled recombination of PMI and Altria less likely.
May 10, 2022
PMI Holds 2022 Annual Meeting

Photo: PMI
Philip Morris International held its 2022 annual meeting of shareholders on May 4. André Calantzopoulos, executive chairman of the board, addressed shareholders and answered questions. CEO Jacek Olczak gave the business presentation, which included an overview of PMI’s financial performance and its efforts to support employees impacted by the war in Ukraine, along with an update on the company’s progress in its smoke-free transition and investments in the wellness and healthcare categories.
“The recent months have been an extremely challenging time for many in the PMI family given the war in Ukraine. Our primary concern is for our people and their families, and we are doing everything in our power to help them,” said Olczak in a statement.
“Despite this tragic situation, and the related impacts on our operations in the region and more broadly, the outlook for our business excluding Russia and Ukraine remains strong and our smoke-free ambition remains intact. We are off to a strong start to the year, following an excellent performance in 2021, with robust underlying momentum and a reacceleration in IQOS user growth.
“We continue to prioritize returns to shareholders and have increased the dividend for 14 consecutive years since the 2008 spin. In 2021, we raised the dividend by 4.2% to an annualized rate of $5.00 per common share. In addition, since July 2021, we have repurchased approximately $1 billion in shares as part of our current three-year program.”
Approximately 81 percent of the shares entitled to vote were represented at the meeting in person or by proxy. The shareholders elected 14 nominees for director; approved, on an advisory basis, the compensation of named executive officers; approved the 2022 performance incentive plan; ratified the selection of PricewaterhouseCoopers as independent auditors; and voted against a shareholder proposal. Final voting results will be included in a Form 8-K that PMI will file with the SEC in the coming days.
An archived copy of the webcast of the meeting will be available for approximately one year from the date of the meeting at http://www.virtualshareholdermeeting.com/PMI2022.
May 5, 2022