Tag: Philip Morris International

PMI Urges U.K. to End Cigarette Sales

Jacek Olczak (Photo: PMI)
Philip Morris International’s CEO, Jacek Olczak, has called on the U.K. government to ban cigarettes within the next 10 years.
Olczak said PMI could “see the world without cigarettes … and actually, the sooner it happens, the better for everyone,” according to the Guardian.
“Give [people] a choice of smoke-free alternatives … with the right regulation and information, it can happen 10 years from now in some countries,” said Olczak. “You can solve the problem once and forever.”
PMI recently stated that it wants half its turnover to come from nonsmoking products as it pushes its new mission to “unsmoke the world” by phasing out cigarettes. The company has come under scrutiny, however, by anti-smoking groups that feel tobacco companies are situating themselves as part of the solution while still promoting and selling cigarettes.

We welcome PMI’s commitment to reduced-risk products. However, there are millions of adults who enjoy smoking cigarettes and don’t want to quit and that choice must be respected.
Simon Clark, director, Forest
Smokers’ rights group Forest rejected PMI’s suggestion.
“We welcome PMI’s commitment to reduced-risk products. However, there are millions of adults who enjoy smoking cigarettes and don’t want to quit and that choice must be respected,” said Simon Clark, director of the smokers’ lobby group Forest.
“If Philip Morris wants to leave smoking behind, good luck to them, but banning cigarettes won’t stop people smoking. It will simply drive the product into the hands of criminal gangs who will happily sell illicit and counterfeit cigarettes to anyone who wants them, including children.
“We support the carrot not the stick approach to smoking cessation. Trying to force smokers to quit by banning cigarettes is illiberal and a fool’s errand that will end badly.”
July 26, 2021
PMI Reports Higher Quarterly Revenues

Photo: PMI
Philip Morris International reported net revenues of $7.59 billion in the quarter that ended on June 30, 2021, up 14.2 percent from the net revenues reported in the comparable 2020 quarter. Adjusted net revenues were $7.84 billion compared with $6.65 billion in the 2020 second quarter. Second-quarter 2021 operating income stood at $3.13 billion versus $2.73 billion for the previous year’s second quarter. Adjusted quarterly operating income was $3.45 billion, up from $2.8 billion a year ago.
The company shipped 180.49 billion cigarettes and heated-tobacco units during the 2021 second quarter, 6.1 percent more than during the 2020 second quarter. Sales of heated-tobacco units increased 30.2 percent from the 2020 quarter to 24.36 billion units. Combustible cigarette sales increased by 3.2 percent to 156.14 billion sticks over the same period.
“We delivered strong financial performance in the quarter, with adjusted diluted EPS of $1.57 up by 17.8 percent on an organic basis,” said Jacek Olczak, CEO of PMI, in a statement.
“IQOS continued its impressive growth, surpassing an estimated 20 million total users by quarter-end and driving sequential quarterly heated-tobacco unit in-market sales volume growth of 8 percent. We expect this momentum to be bolstered by the launch of IQOS ILUMA starting next month in Japan.”
“We are increasing our full-year adjusted outlook, with organic net revenue growth of 6 percent to 7 percent and adjusted diluted EPS growth of 12 percent to 14 percent on the same basis, mainly reflecting improved total industry volume. This outlook further supports our recently announced three-year share repurchase program of up to $7 billion.”
“In addition, the proposed acquisitions of Fertin Pharma and Vectura Group will reinforce our long-term growth potential in the beyond nicotine space.”
PMI’s adjusted net revenues exclude the impact related to a Saudi Arabia customs assessments. In June 2021, the Customs Appeal Committee in Riyadh notified the company’s distributors in Saudi Arabia of its decisions to largely reject their challenges of Saudi Arabia Customs General Authority assessments.
Based on these decisions, PMI recorded a pre-tax charge of $246 million in the second quarter of 2021, resulting in a $0.14 per share adverse impact on the company’s reported diluted earnings per share. In accordance with U.S. generally accepted accounting principles, the charge was recorded as a reduction of net revenues on the consolidated statement of earnings.
July 21, 2021
U.K. to Scrutinize PMI’s Vectura Purchase

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U.K. Business Minister Kwasi Kwarteng has asked officials to monitor Philip Morris International’s proposed takeover of drugmaker Vectura Group, reports The Times.
PMI agreed on Friday to buy Vectura for £1.05 billion ($1.45 billion), giving the U.S. firm access to the British drugmaker’s respiratory ailment treatments and inhaling device technology.
The deal sparked outrage from anti-smoking groups, including Cancer Research U.K. and Action on Smoking and Health.
Kwarteng has asked officials to find out what plans PMI has for FTSE 250-listed Vectura. The British government is reportedly uncomfortable that a cigarette company would seek to profit from conditions such as asthma and lung disease.
Jon Ashworth, Labour’s health spokesman, and Ed Miliband, the Labour business spokesman, wrote to Kwarteng over the weekend, urging the government, under the Enterprise Act 2002, to intervene “to mitigate the effects of public health emergencies.”
Vectura is one of the U.K.’s leading respiratory disease companies.
It has been targeted by Philip Morris as the company tries to diversify its business away from harmful tobacco products.
July 14, 2021
PMI Details Views on Heated Tobacco

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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
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
PMI and TissUse to Conduct Joint Research

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Philip Morris International and TissUse have signed a collaboration agreement to utilize PMI’s InHALES technology in combination with TissUse’s proprietary multi-organ-chip (MOC) platform to enable inhalation exposure of functional human tissues in homeostasis at minute scale in vitro.
The two partners will develop an integrated human aerosol test platform that emulates the entire human respiratory tract in terms of dimension and architecture. PMI has established a platform, InHALES, that matches the architecture and characteristics of the human respiratory tract.
TissUse has established the widely used Humimic MOC platform, which enables functional human tissue response in vitro. A “plug-and-play” interface between the two technologies will allow physiologically relevant exposure to complex aerosols in the background of an in vivo-like organization and breathing performance of the human lungs.
The novel integrated Humimic–InHALES test platform will allow acute and subchronic tests on lung models in combination with miniaturized human liver equivalents, enabling assessment of local effects on the biological barrier of lung epithelia, penetration of substances into blood circulation and eventual systemic effects.
According to PMI, Humimic–InHALES will provide a highly predictive model for assessing respiratory toxicity and systemic human effects of inhaled aerosols and their constituents, such as environmental toxins, smoke particles, airborne pathogens and inhalable medications.
“The agreement meets PMI’s ambitions to extend its competence in aerosol applications to the development of new methods for exploratory research and translational sciences, which will not only help advance the research and development of PMI products but also broadly support biomedical research beyond PMI’s core business,” said Julia Hoeng, global head of discovery at PMI, in a statement.
“This agreement synergizes the complementary ideas, know-how and experience of both companies. We are very much looking forward to enhancing TissUse’s highly innovative product and assay portfolio through this collaboration,” said Reyk Horland, CEO of TissUse.
July 4, 2021
Philip Morris to Acquire Fertin Pharma
Photo: peshkov
Philip Morris International has entered into an agreement to acquire Fertin Pharma, a leading developer and manufacturer of innovative pharmaceutical and well-being products based on oral and intra-oral delivery systems, for an enterprise value of DKK5.1 billion ($820 million).
“The acquisition of Fertin Pharma will be a significant step forward on our journey toward delivering a smoke-free future—enhancing our smoke-free portfolio, notably in modern oral, and accelerating our progress in beyond nicotine,” stated Jacek Olczak, chief executive officer of PMI, in a statement.
“Both PMI and Fertin share a commitment to science and consumer-centric innovations for better living, and I am delighted we have reached this agreement. Fertin’s diverse portfolio of technologies, evolving business mix and world-class expertise will enrich our innovation pipeline and capabilities, providing speed and scale in oral delivery to support our 2025 goals of generating more than 50 percent of our net revenues from smoke-free products and at least $1 billion from products beyond nicotine.”
Fertin Pharma is a privately held company with more than 850 employees and operations in Denmark, Canada and India. It is a contract development and manufacturing organization (CDMO) specializing in the research, development and production of gums, pouches, liquefiable tablets and other solid oral systems for the delivery of active ingredients, including nicotine, where it is a leading producer of nicotine replacement therapy (NRT) solutions.
According to PMI, the company and its employees bring significant scientific experience and know-how to the development of innovative solutions, driving above-category growth across new and existing business areas. In 2020, Fertin Pharma generated net revenues of DKK1.1 billion. The transaction value represents a multiple of around 15 times Fertin Pharma’s 2020 EBITDA.

Fertin’s diverse portfolio of technologies, evolving business mix and world-class expertise will enrich our innovation pipeline and capabilities.
Jacek Olczak, CEO, PMI
Fertin Pharma is currently owned by the global investment organization EQT and Bagger-Sorensen & Co. Upon the completion of the acquisition, Fertin Pharma will become a wholly owned subsidiary of PMI. PMI will fund the transaction with existing cash and expects it to close in the fourth quarter of 2021, subject to approval by the appropriate regulatory authorities. PMI expects the impact of the acquisition on its full-year 2021 adjusted diluted EPS to be immaterial.
“Fertin Pharma has been on a fantastic journey with EQT and the Bagger-Sorensen family as owners,” said Peter Halling, CEO of Fertin Pharma, in a press note. “With the new ownership in place, Fertin Pharma will be in a great position to continue delivering on our vision and mission, including our work as a CDMO for our customers.
“PMI is going through an inspiring transformation as a company with an ambition to deliver a smoke-free future and building a beyond nicotine product portfolio. An ambition that perfectly matches that of Fertin Pharma, namely to enable people to live healthier lives. In PMI, we have found a new owner and partner who shares our vision, who is committed to science and who will enable Fertin Pharma to further accelerate and grow as a company.”
With the acquisition of Fertin Pharma, PMI will:
Gain substantial know-how for the development, formulation and commercialization of current and additional smoke-free platforms—including the ability to accelerate its presence in the fast-growing modern oral category, providing superior consumer experience through a broad range of smoke-free products such as nicotine pouches and lozenges.
Leverage on Fertin’s oral delivery platforms to access a range of promising technologies—complementary to PMI’s inhalation expertise—for scientifically substantiated botanicals and other self-care wellness products, including over-the-counter solutions and supplements that improve people’s lives in areas such as sleep, energy, calm and focus.
Further build its overall platform of R&D and manufacturing expertise in nicotine and beyond nicotine product areas through the addition of Fertin’s strong capabilities and skilled workforce, including 80 scientists.
Accelerate progress on key sustainability priorities, notably in broadening the reach and access of its smoke-free alternatives to adult smokers around the world to accelerate the end of smoking and building a strong beyond nicotine business.
Earlier this year, PMI announced its goal to generate more than 50 percent of its total net revenues from smoke-free products by 2025. In addition to its continued commitment to achieve a smoke-free future, PMI says it aims to leverage capabilities in life sciences, product innovation and clinical expertise to expand its portfolio beyond tobacco and nicotine with scientifically substantiated products and solutions that improve people’s lives and generate a net positive impact on society.
July 1, 2021
KPMG: Illicit Cigarette Trade up in Europe

Photo: IvanSemenovych
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 new study by KPMG.
The increase of the illicit cigarette market—which comprises contraband, counterfeit and illicit whites—was driven by an unprecedented 87 percent surge in counterfeit consumption. The tax loss for governments of the EU’s 27 member states now amounts to approximately €8.5 billion ($10.15 billion).
The annual study, conducted independently by KPMG and commissioned by Philip Morris International, evaluated the consumption and flows of illicit cigarettes in 30 European countries—the 27 EU member states as well as U.K., Norway and Switzerland.
It shows how legal and illicit cigarette consumption was impacted by the Covid-19 pandemic, a period of lockdowns and restricted movement of people within the EU coupled with declines in affordability. The report estimates that total consumption of cigarettes declined by 4.7 percent in 2020 to 438.8 billion in the EU member states, while the Covid-19-related border controls and travel restrictions resulted in a sharp decrease of nondomestic consumption, which declined in 2020 by 18.5 percent (11.9 billion cigarettes). The decline in total cigarette consumption also coincided with the growth of 6 billion cigarette equivalent units in the fine-cut tobacco category in 2020.
Consumption of illicit whites and other contraband cigarettes decreased year-over-year, but these declines were more than offset by an increase in counterfeit, which almost doubled in 2020, equating to 10.3 billion fake cigarettes, up from 5.5 billion in 2019. This was estimated to be driven mainly by an unprecedented 609 percent increase in counterfeit cigarette consumption in France, reaching 6 billion fake cigarettes consumed in the country alone.

It is crucial to protect consumers against counterfeits and that law enforcement, governments and trademark owners come together as one to address and eradicate illicit trade.
Alvise Giustiniani, vice president of illicit trade prevention, PMI
“It is crucial to protect consumers against counterfeits and that law enforcement, governments and trademark owners such as ourselves in the private sectors come together as one to address and eradicate illicit trade in Europe and beyond,” said Alvise Giustiniani, vice president of illicit trade prevention at PMI, in a statement. “Eliminating illicit trade is particularly important within the context of PMI’s transformation toward a smoke-free future, and we need to continue working in partnerships to address any potential illicit trade threats, including in our novel products. Compliance to the law and effective enforcement against criminals profiting from illicit trade is an absolute must.”
Interviews with law enforcement, conducted by KPMG as part of the study, indicate that organized criminal groups continued to move their operations inside the EU borders as a large proportion of illicit whites and counterfeit cigarettes are also believed to be manufactured in illegal factories within the EU. This is further supported by the increasing number of illegal cigarette factory raids in multiple European countries.
June 24, 2021
Connecticut Scolded for Welcoming Philip Morris

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The Campaign for Tobacco-Free Kids (CTFK) slammed Connecticut for welcoming Philip Morris International to the state.
On June 22, the tobacco giant announced it would relocate its corporate headquarters to Connecticut from New York, bringing approximately 200 jobs to the state. State leaders, who had helped facilitate the move, welcomed the decision.
“We are excited to welcome PMI to the state of Connecticut, showing once again that our state is a growing and thriving ecosystem for businesses,” said Connecticut Governor Ned Lamont after the announcement. “They recognize what we’ve been saying for years: Connecticut is a wonderful place to raise a family and a competitive place to conduct business. I am also impressed by their culture and desire to integrate closely into the communities in which they operate, and we look forward to seeing their active and charitable contributions to our state.”
“Philip Morris International’s move to Southwest Connecticut will bring approximately 200 good-paying jobs that will boost our economy and augment the tax base, which funds our schools, infrastructure and essential community services,” said State Representative Jim Himes. “As our area recovers from Covid-19, I’m pleased to see new economic investment in our community and thank Governor Lamont for his laser-like focus.”
CTFK President Matthew L. Myers, by contrast, was aghast.
“How in the world can any public official welcome a company whose main product kills when used as intended and contributes to over 8 million deaths worldwide each year?” he said in a statement.
“The 200 corporate jobs promised by Philip Morris International pale in comparison to the 4,900 Connecticut residents who die each year from smoking and the 56,000 Connecticut kids alive today who will ultimately die prematurely from smoking. That’s in addition to the millions sickened and killed worldwide by Philip Morris’ products each year. Far from helping to create a thriving business climate, Philip Morris International is in the business of selling products that addict, sicken and kill. They should not be welcomed anywhere.”
PMI’s new headquarters are expected to be operational by summer 2022.
June 23, 2021