IQOS is approved by FDA, and Altria plans to market HNB devices in the United States.
The Food and Drug Administration (FDA) has approved Philip Morris International’s iQOS device, which, unlike traditional burning tobacco, only heats and roasts tobacco to reduce the release of many harmful substances from tobacco burning.
Altria plans to launch iQOS in Atlanta this summer (2019). Philip Morris International first launched iQOS in Nagoya and Milan in 2014.
PMI has submitted two separate applications to regulators, one for the sole sale of such HNB tobacco device, and the other for the marketing of HNB products as “tobacco harm reduction” products.
Regulators have not yet made a decision on the latter application.
PMI has now been allowed to sell iQOS device and to heat cigarette cartridges (iQOS cigarettes) with Marlboro, Marlboro Smooth Menthol and Marlboro Fresh Menthol.
Even if “low-risk products” are temporarily not approved, the FDA’s decision marks the victory of Philip Morris International and Altria. As new tobacco has a tendency to surpass traditional cigarettes, iQOS is the key product of the two companies in the future. The current smoking rate in the United States is always on a downward trend, breaking through the historical low, leading the tobacco giant to seek business growth through diversified products.
After the news came out, PMI shares rose 2% to close at 86.56. Altria shares rose 1.5% to close at $54.33.
The iQOS tobacco heating system consists of three parts: a heater, a tobacco rod (cigarette) and a charger.
The “pen-like” device contains a ceramic heater that heats the tobacco rods produced by Philip Morris to 350 degrees Celsius, while the tobacco in traditional cigarettes burns at temperatures above 600 degrees Celsius.
When reviewing the PMI application, the FDA found that toxic chemicals in the smoke emitted by iQOS “have less toxic chemicals than cigarette smoke, and many of the toxic substances identified in traditional cigarettes are also lower. “.
The FDA also found that iQOS provides nicotine levels similar to traditional cigarettes, suggesting that “users have the potential to abandon traditional cigarettes through iQOS products.”
The data also shows that iQOS will not appeal to non-smokers and children, however, the FDA still imposes “strict restrictions” on iQOS marketing methods, especially online and on social media.
Philip Morris International and Altria must advertise to the FDA on product labeling, advertising, marketing programs, and how to limit youth use, advertising, and promotions, and must not promote iQOS on television and radio because the FDA believes iQOS meets the definition of cigarettes. Therefore, the existing cigarette restriction regulations must be observed.
“We fully support this willingness,” PMI CEO Andre Calantzopoulos said in a statement. “The FDA has set a high standard and we look forward to working with the FDA to achieve the goal of iQOS reaching the right consumer group – existing adult smokers.”
Altria plans to open an iQOS store in Atlanta this summer and build a large number of “mobile stores” for sale.
The Marlboro Cigarettes (heated cigarettes) that are paired with iQOS will be included in retail outlets such as “Circle K”, “Murphy USA”, “QuekTrip”, “ RaceTrac” and “Speedway”.
Altria CEO Howard Willard said in a statement: “Philip Morris International America will adopt a strategy based on market reaction and expect iQOS to expand the market quickly and efficiently.”
Last year (2018), “Low-risk products” generated $4.1 billion in sales for Philip Morris International, which accounted for 14% of total revenue of $29.63 billion. Philip Morris International plans to increase this ratio to 38% by 2025. 42%.
Since the launch of iQOS in Nagoya, Japan and Milan, Italy in 2014, Philip Morris has introduced it to more than 40 countries and regions around the world, and some of them have grown rapidly.
The approval of sales in the United States this time indicates that iQOS is about to enter a market where e-cigarettes are growing rapidly, thanks in large part to Altia’s $12.8 billion acquisition of a 35% stake in Juul last December.
Centers for Disease Control and Prevention estimates that there are currently 34.3 million adults smoking in the United States. Philip Morris said that iQOS will be recognized by adult smokers because it is closer to traditional cigarettes but less harmful.
However, the “Anti-Tobacco Organization” expressed its opposition to the idea that heat not burn products is only a new means used by large tobacco companies to attract smokers.
“Nicotine replacement products can be a new option for those who still want to continue smoking,” former FDA Commissioner Scott Gottlieb acknowledged. Under his influence, the FDA has adopted the idea that nicotine products have a range of risks, with traditional cigarettes being the most deadly, while others may be less harmful.