Philip Morris Global Chief Communications Officer Moira Gilchrist has clarified in a video presentation PMI’s marketing practices and facts relating to Zyn nicotine pouches, which recently came under fire by Senate Majority Leader Chuck Schumer.
Schumer asked the U.S. Food and Drug Administration and the Federal Trade Commission to take action on PMI’s marketing practices and the health effects of Zyn, calling the product the next “trend in addiction for teens.”
The United States Court of Appeals for the 2nd Circuit on Dec. 26, 2023, affirmed a district court’s dismissal of a putative class action asserting claims against Philip Morris International that the company made false or misleading statements regarding both the scientific studies it conducted in support of an application to the Food and Drug Administration and the outlook for the company’s sales growth in Japanese markets, according to Lexology.
The district court held that the plaintiffs failed to adequately prove falsity or scienter. The 2nd Circuit affirmed the dismissal, holding that the plaintiffs failed to adequately plead falsity.
The court decided two questions of first impression in the 2nd Circuit, holding a securities fraud defendant’s statement that its scientific studies comply with a methodological standard that is published and internationally recognized, but stated in general and inherently subjective terms, is properly analyzed as a statement of opinion rather than a statement of fact, and holding that, whereas a securities fraud defendant’s statement expresses an interpretation of scientific data that is ultimately endorsed by the FDA, such a statement is per se “reasonable” (i.e., supported by “meaningful inquiry”) as a matter of law.
The plaintiffs alleged that PMI made misrepresentations in securities filings and public statements about clinical studies it conducted in support of an application to the FDA to sell IQOS in the U.S. and market IQOS as reduced risk. The plaintiffs also alleged that PMI made misleading statements about its growth projections in Japan regarding IQOS. The district court found that none of the challenged statements were false or misleading because all the challenged statements were true, inactionable puffery or inactionable statements of opinion. Furthermore, the district court found that the plaintiffs failed to establish the required strong inference of scienter, either by alleging facts showing motive and opportunity to commit fraud or strong circumstantial evidence of conscious misbehavior or recklessness. Accordingly, the district court granted the defendants’ motion to dismiss the plaintiffs’ first amended complaint and denied the plaintiffs’ motion for reconsideration. After the district court dismissed the plaintiffs’ second amended complaint, this time with prejudice, the plaintiffs appealed.
Consumer demand for nicotine products has fluctuated due to inflation and rising cigarette prices over the past 13-19 months. However, the Neilsen report covering the four-week period ending Dec. 30 shows that market shares are holding steady for both next-generation and traditional tobacco brands.
The market share of R.J. Reynolds’ top-selling Vuse e-cigarette remained flat at 42 percent in December at convenience stores, according to the report. While Vuse’s market share was unchanged, No. 2 Juul dropped from 24.3 percent to 24.2 percent for the report covering the four-week period ending Dec. 30.
As recently as May 2019, Juul held a 74.6 percent share in the U.S. electronic cigarette market. That’s when a series of regulatory actions led to product-reduction concessions, according to media reports.
Meanwhile, Altria Group’s ownership of No. 3 NJoy hasn’t resulted in a meaningful market-share increase so far. Nielsen cited a research error by why it did not include an update for NJoy in the latest report. It was at 2.6 percent in the previous report.
Fontem Ventures’ blu eCigs, an affiliate of Imperial Brands Plc, was unchanged at 1.2 percent.
The overall e-cigarette category was down 9.9 percent.
In traditional cigarettes, Philip Morris’ top market share was at 50.6 percent in the latest Nielsen report with top-selling Marlboro representing 45.6 percent of overall market share.
Meanwhile, Reynolds was at 33.2 percent with Newport at 12.9 percent and followed by Camel (7.8 percent), Natural American Tobacco (3.7 percent) and Pall Mall (3.7 percent).
ITG was at 8.5 percent overall, although ITG has said its market share is closer to 10 percent. Its No. 7 Winston brand remained at 2 percent, while Kool and Maverick remained tied for No. 8 at 1.8 percent.
Goldman Sachs analyst Bonnie Herzog said that “in terms of specific company trends, total nicotine sales declines improved across the board for Altria, BAT, Imperial and Juul, while decelerating for all other manufacturers broadly in the latest period.”
The decline in cigarette sales continues at a strong pace, said David Sweanor, an adjunct law professor at the University of Ottawa and the author of several e-cigarette and health studies.
“Yet, as Altria results showed and Barclays recently highlighted, much of this is due to cross-category migration,” Sweanor said.
“People are switching to far lower-risk options. But disposable vaping products appear to currently be the greatest factor in this migration.”
TD Cowen analyst Vivian Azer said consumers’ cigarette “downtrading to discount and deep discount continues to benefit Imperial’s share trends.”
Philip Morris International has launched IQOS Iluma in Saudi Arabia, Kuwait and Bahrain, with a goal of creating a smoke-free future in the Gulf Cooperation Council region, according to the Saudi Gazette.
“Adult smokers may be unaware of the choices they are making, largely due to the lack of information and knowledge on products that bring them harm, versus scientifically backed products that reduce the likelihood of smoking-related disease,” said Tarkan Demirbas, area vice president of the Middle East at Philip Morris Management Services (Middle East) Limited. “At PMI, we are invested in providing existing adult smokers with better alternatives through harm reduction innovations, which can help them take a step back from cigarettes toward better alternatives.”
“Smoking-related diseases today call for a pragmatic solution that places consumers at the forefront while moving away from cigarettes,” said Saim Yasin, director of marketing and digital at PMMS. “IQOS Iluma is our latest innovation in tobacco-heating systems that will accelerate our goal toward a smoke-free future. Through a growing portfolio of smoke-free alternatives, we are reaffirming our commitment to create realistic, society-wide change that can reimagine the world we are living in—without cigarettes.”
The IQOS Iluma series offers three devices: IQOS Iluma Prime, IQOS Iluma and IQOS Iluma One. All the devices use new induction heating technology but offer different designs.
Philip Morris International recently hosted its seventh Technovation at the Cube, the company’s R&D center in Neuchatel, Switzerland. The event provides stakeholders the opportunity to interact with senior leaders, scientists and R&D experts from PMI.
According to PMI, the conversations focused on the crucial roles that innovation, technology and science can play in enabling a better future for everyone—highlighting the call to harness the full potential of innovation and evidence-based policies that are needed to steer the collective efforts toward eliminating smoking.
[T]here’s a potential for a tenfold reduction in smoking-attributable deaths compared with historical tobacco control measures alone.
“It is no longer a case of if smoke-free alternatives are better than cigarette smoking; it is a case of by how much,” said PMI CEO Jacek Olczak in a statement. “Based on WHO [World Health Organization] and other third-party data, our hypothetical model shows that if smoke-free products are assumed to be 80 percent less risky than cigarettes—and if people who currently smoke were to switch to them completely—then over their lifetime, there’s a potential for a tenfold reduction in smoking-attributable deaths compared with historical tobacco control measures alone.”
Gregoire Verdeaux, PMI’s senior vice president of external affairs, led a discussion on what success looks like when regulating smoke-free alternatives. Citing Italy, Japan, New Zealand, Sweden, the U.K., the U.S. and other countries, Verdeaux made the case for inclusive and innovative frameworks that have complemented traditional tobacco control measures in expediting the decline of smoking.
The COP10 could be used an as opportunity to bring all stakeholders together, consider the comprehensive science on nicotine alternatives and create guidelines that can help reduce harm.
“The number of smokers globally has remained virtually unchanged for the past 30 years,” said Verdeaux, who said the upcoming session of the Conference of the Parties to the WHO Framework Convention on Tobacco Control (COP10)—which was recently postponed to 2024 due to civil unrest in its host country, Panama—presents a chance to change the global smoking rates status quo.
“The COP10 could be used an as opportunity to bring all stakeholders together, consider the comprehensive science on nicotine alternatives and create guidelines that can help reduce harm for hundreds of millions of smokers around the world. Unfortunately, this is not the case, but we hope that this will change in future for the benefit of a billion smokers and global public health,” said Verdeaux.
The missing piece of the puzzle is the collective effort of governments, the public health community, our industry and civil society.
Tommaso Di Giovanni, PMI’s vice president of international communications and engagement, discussed what more can be done to encourage innovation in the tobacco industry. He said, “Better alternatives to cigarettes exist, and scientific data support their potential to be less harmful. The missing piece of the puzzle is the collective effort of governments, the public health community, our industry and civil society to make these alternatives accessible to adult smokers who do not quit. To support this transformation, we envision to become a majority smoke-free-led entity, with smoke-free options now accounting for over 36 percent of total net revenues, following third-quarter financial results.”
Philip Morris International is concerned that participants in the upcoming Conference of the Parties to the World Health Organization Framework Convention on Tobacco Control (FCTC) will promote prohibitionist policies for noncombustible tobacco products, according to an article in The Guardian.
“The agenda and meeting documents have been made public for the main part,” PMI Senior Vice President of External Affairs Gregoire Verdeaux wrote in an email. “Unfortunately, they reconfirmed every concern we had that this conference may remain as the biggest missed opportunity ever in tobacco control’s history … WHO’s agenda is nothing short of a systematic, methodical, prohibitionist attack on smoke-free products.”
Without “reasonable, constructive outcomes,” Verdeaux wrote, the “WHO will have irreversibly compromised the historic opportunity for public health presented by the recognition that smoke-free products, appropriately regulated, can accelerate the decline of smoking rates faster than tobacco control combined.”
While tobacco companies are not invited to the Conference of the Parties to the FCTC, Verdeaux said he will be in Panama “to publicly denounce the absurdity of being excluded from it while PMI today [is] undoubtedly the most helpful private partner WHO could have in the fight against smoking.”
Last year, PMI made $10.19 billion in revenue from products like heated-tobacco and electronic cigarettes.
Philip Morris International has joined the We Card Program, a national nonprofit serving the nation’s retailers of age-restricted products. The company’s Swedish Match affiliate will serve on We Card’s manufacturer advisory council.
Independent retail establishments and large retail chains utilize We Card’s educational and training services for their compliance efforts with federal, state and local laws aimed at preventing age-restricted product sales to minors.
National and state retail trade associations, government officials, community groups and others also support We Card’s ongoing efforts to raise awareness of responsible retailing and age verification requirements and to educate and train retail employees to identify and prevent underage attempts to purchase age-restricted products.
“As we enter the U.S. market, our ambition is twofold: to be the market leader across America for innovative smoke-free products that are a better choice than continued cigarette use and to ensure that youth cannot access these products, which are intended only for adults who smoke or use another nicotine product,” said Stacey Kennedy, president of the Americas and CEO of the PMI U.S. business. “Joining We Card reflects the commitment shared by PMI and Swedish Match to further enhance youth access prevention programs in close cooperation with our retail partners.”
“The We Card Program has long been a vital tool for retailers, and we look forward to working with them to expand the program’s suite of tools to reflect the growing range of innovative nicotine products, including oral pouches,” Kennedy added.
“We Card is pleased to have Swedish Match join our manufacturer advisory council. This will help us further our mission to prevent underage access to nicotine products and work to address the problem of the social sourcing of those products,” said Doug Anderson, president of the We Card Program.
Philip Morris International unveiled a zero-tobacco stick for use with its heat-not-burn device IQOS, which may help the company avoid tax and other regulations that affect its tobacco products in some markets, according to Reuters.
The new sticks, called LEVIA, do not contain tobacco but rather a “nontobacco substrate” infused with nicotine. It offers flavors including tobacco, menthol with blueberry and peppermint.
LEVIA may avoid the heavy taxes or other controls imposed on other tobacco products, according to CEO Jacek Olczak. He said it “may not be subject to flavor regulations in some jurisdictions” and that it “doesn’t fit” in existing fiscal categories.
A PMI spokesperson declined to comment on when and where LEVIA would launch or what substance replaces the tobacco.
Philip Morris International is considering selling a stake in Vectura, according to Reuters.
PMI is looking to bring on a partner to help operate and grow Vectura’s drug manufacturing outsourcing business, according to company statements to the Wall Street Journal. PMI could possibly sell a majority or a minority stake. Other options are a licensing or royalties deal or a commercial partnership.
In 2021, PMI bought Vectura for $1.36 billion as part of the company’s long-term plan to transition to a “broader healthcare and wellness” company. PMI also acquired Fertin Pharma and OtiTopic in the same year.
“We aim to accelerate Vectura’s growth and will be exploring potential partnerships to enhance its contract development and manufacturing organization business,” Chief Financial Officer Emmanuel Babeau said in July, noting that the company remained committed to developing the wellness healthcare segment.
The Science Based Targets initiative (SBTi) has verified Philip Morris International’s Forest, Land and Agriculture (FLAG) emissions reductions targets.
According to the Science Based Targets initiative, “SBTi’s FLAG guidance provides the world’s first standard method for companies in land-intensive sectors to set science-based targets that include land-based emission reductions and removals. The guidance enables companies to reduce the 22 percent of global greenhouse gas emissions from agriculture, forestry and other land use.”
PMI maintains its science-based target to reach net-zero emissions for scopes 1, 2 and 3 by 2040, which was validated by SBTi in July 2022. As part of its ongoing net-zero commitment, PMI has now pledged to reduce absolute scope 3 emissions related to forestry, land and agriculture by 33.3 percent by 2030 in line with SBTi best practice. PMI aspires to reduce all other scope 3 emissions by 27.5 percent within the same timeframe. PMI’s 2040 net-zero target remains in line with a 1.5-degree scenario, aligned with leading edge target-setters across business industries. PMI outlines comprehensive plans to achieving net-zero by 2040 in its Low-Carbon Transition Plan.
“We renew and continue our effort to direct our activities toward decarbonizing our value chain and are committed to aligning our work with relevant updates on international methodologies, such as the Science Based Targets for Nature (SBTN) and guidance from the SBTi on forest, land, and agriculture science-based targets,” said Scott Coutts, senior vice president of operations at PMI.
“The SBTi’s science-based targets on forestry, land use, and agriculture will become the gold standard for companies within the agricultural sector to accelerate emissions reductions, and we are pleased to be early adopters,” said Jennifer Motles, chief sustainability officer at PMI. “The SBTi’s validation demonstrates that our targets are rooted in science and aligned with the Paris Climate Agreement’s goal to keep global warming to the 1.5 degrees Celsius threshold that is considered the limit beyond which climate-related impacts will be catastrophic.”
The Science Based Targets initiative is a global body enabling businesses to set ambitious emissions reductions targets in line with the latest climate science. It is focused on accelerating companies across the world to halve emissions before 2030 and achieve net-zero emissions before 2050. The initiative is a collaboration between CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature and is one of the We Mean Business Coalition commitments. The SBTi defines and promotes best practice in science-based target setting, offers resources and guidance to reduce barriers to adoption, and independently assesses and approves companies’ targets.