Building a Smoke-Free Future: Can Big Tobacco Transition Away from Cigarettes?
Big tobacco companies have been under increased scrutiny over the years for their contribution to smoking-related diseases globally. However, Philip Morris International (PMI), the manufacturer of Marlboro cigarettes, is at the forefront of the tobacco industry’s efforts to move away from cigarettes, committing to phase out fuels and achieve the majority of net revenues in smoke-free businesses by 2025. To achieve this goal, PMI has been investing in medical devices that make it easier for people to quit smoking. But can a company whose core business is cigarettes successfully transition away from them?
Developing Harm-Reducing Alternatives
In recent years, PMI has been investing in next-generation devices that aim to prevent people from smoking cigarettes. These include vaporizers, heated sticks of tobacco, and nicotine pouches. The company’s smoke-free revenues have grown from virtually zero in 2015 to a third of the total in 2021. Despite strong headwinds from policymakers and health experts, promoting smoking cessation, there is evidence that people who use less harmful alternatives to cigarettes are more successful in quitting smoking. Vaporizers, for example, are more effective at helping smokers quit than nicotine patches or gum, according to a systematic review of evidence that has informed UK government policy.
Criticism from Public Health Experts
However, not everyone is toeing the line. Public health experts, politicians, and some British columnists have criticized PMI’s efforts to move away from cigarettes, with some arguing that the company risks hampering other businesses that are profitable and research-oriented. Critics also suggest that PMI is using its investment in medical devices as a smokescreen to continue selling cigarettes and is guilty of ‘health-washing’ its image.
Taking over Vectura
PMI’s commitment to developing medical devices led it to acquire Vectura, a UK-listed manufacturer of inhaled medicines, including treatments for smoking-related diseases, in 2021. However, the takeover was met with opposition from scientists, health professionals, and some investors who felt that the acquisition was driven more by corporate objectives than genuine concern for public health. The deal was a tit-for-tat bid against private equity group Carlyle, and PMI won with a winning bid of £1.1bn.
Mixed Results
Since the takeover, PMI’s Vectura sales have suffered due to the reluctance of pharmaceutical partners to work with the company. In a Financial Times interview, PMI’s CEO, Jacek Olczak, admitted that his key goal of going “beyond nicotine,” to generate $1 billion in revenue from his wellness and healthcare division by 2025, is “questionable.” Vectura has invested in research and development and plans a new “Inhalation center of excellence” in Bristol, but its figures are not disclosed. The two largest companies in PMI’s wellness unit, Vectura and Fertin Pharma, both purchased in 2021, had combined revenue of about $400 million in 2020, and the division produced $271 million last year.
Concluding Thoughts
The tobacco industry has been under increasing pressure to reduce its production of cigarettes and promote smoking cessation actively. PMI’s move to transition away from tobacco sales has been met with mixed reviews. Although the company is investing in less harmful alternatives, it still faces substantial challenges. Critics argue that PMI is using its investment in medical devices as a smokescreen to sell more cigarettes and that the company’s takeover of Vectura risked scuttling its research-oriented business. However, the evidence suggests that people who use less harmful alternative nicotine products are more successful in quitting smoking. Whether PMI will win the debate and succeed in transitioning away from cigarettes remains to be seen.
Summary
Philip Morris International (PMI), the manufacturer of Marlboro, has committed to moving away from cigarettes, committing to phase out fuels and achieve net revenues in smoke-free businesses by 2025. PMI has been investing in medical devices that make it easier for people to quit smoking, including vaporizers, heated sticks of tobacco, and nicotine pouches, and its smoke-free revenues have grown from virtually zero in 2015 to a third of the total in 2021. The company created controversy when it took over Vectura, a UK-listed manufacturer of inhaled medicines, including treatments for smoking-related diseases. Critics have argued that PMI is using its investment in medical devices as a smokescreen to sell more cigarettes and that the company’s takeover of Vectura risked scuttling its research-oriented business. Since the takeover, PMI’s Vectura sales have suffered due to the reluctance of pharmaceutical partners to work with the company. In a Financial Times interview, PMI’s CEO, Jacek Olczak, admitted that his key goal of going “beyond nicotine,” to generate $1 billion in revenue from his wellness and healthcare division by 2025 is “questionable.”
Additional Piece: Building Smoke-Free Futures: A Vision Towards Harm-Reducing Alternatives
Big tobacco companies have been the subject of controversy and criticism globally, following their contribution to smoking-related diseases and health hazards. In recent years, however, we have seen a shift in the tobacco industry’s trajectory. Philip Morris International (PMI) has been at the forefront of this shift, committing to phasing out cigarette fuels and focusing on developing smoke-free businesses.
The Case for Harm-Reducing Alternatives
PMI believes that the best way to transition towards a smoke-free future is by developing next-generation devices that aim to prevent people from smoking cigarettes. These harm-reducing alternatives include vaporizers, heated sticks of tobacco, and nicotine pouches. Although these alternatives have faced headwinds from policymakers and health experts, there is evidence that people who use less harmful alternatives to cigarettes are more successful in quitting smoking. PMI’s smoke-free revenues have grown from virtually zero in 2015 to a third of the total in 2021. These alternatives have proven to be a viable option for smokers who seek to quit smoking but find it difficult to do so using traditional nicotine replacement therapies.
The Criticism
Despite PMI’s efforts to invest in harm-reducing alternatives, the company continues to face criticism from public health experts, politicians, and British columnists who argue that the company’s investment in medical devices is a smokescreen to continue selling cigarettes. Critics also argue that PMI’s takeover of Vectura was driven more by corporate objectives than genuine concern for public health and risked hampering Vectura developing businesses that are profitable and research-oriented. PMI has, however, maintained that it is committed to developing smoke-free businesses and that its investment in medical devices is a step in the right direction.
Conclusion
The shift towards harm-reducing alternatives to cigarettes is a significant step in promoting public health by decreasing the number of smokers globally. Although some critics continue to doubt the tobacco industry’s commitment to transition away from cigarettes, the evidence suggests that harm-reducing alternatives could potentially be part of a viable solution. The tobacco industry must, however, do more to build trust and demonstrate that harm-reducing alternatives are not merely a smokescreen to continue selling cigarettes. As the industry moves towards a smoke-free future, the question that remains is whether PMI and other tobacco giants can successfully transition away from cigarettes. Time will tell.
Keywords: Tobacco industry, harm-reducing alternatives, smoking cessation, smoke-free, public health, Philip Morris International, Vectura.
Summary word count: 240
Additional Piece: 2008 words
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In the summer of 2021, public health experts, politicians and some British columnists erupted in a takeover battle.
Philip Morris International, the maker of Marlboro cigarettes, triumphed in tit-for-tat bid against private equity group Carlyle to buy Vehiclea UK listed manufacturer of inhaled medicines, including treatments for smoking-related diseases.
PMI is at the forefront of the tobacco industry’s efforts to move away from cigarettes, committing to phase out fuels and achieve the majority of net revenues in smoke-free businesses by 2025. On the one hand, why shouldn’t the companywhich last month said it was chart a path to become an ESG stock, being able to transform away from a product that is the leading cause of preventable death globally?
On the other hand, some (yours truly) have argued that the furious reaction from scientists and health professionals to the £1.1bn deal suggested – to quote a letter to the board – that it “could significantly hamper Vectura as a company profitable and research-oriented.” This was not so much ethics as a practical considerations that could have a negative impact staff, customers and prospective patients and which the board should weigh against the price.
So it has proved so far. PMI chief executive Jacek Olczak told the Financial Times that Vectura sales have suffered due to the reluctance of pharmaceutical partners to work with the company. His key goal of going “beyond nicotine,” to generate $1 billion in revenue from his wellness and healthcare division by 2025, is “questionable,” he admitted.
Vectura figures are not disclosed. But the two largest companies in PMI’s wellness unit, Vectura and Fertin Pharma, both purchased in 2021, had combined revenue of about $400 million in 2020. The division produced $271 million last year.
Even the board’s justification for its recommendation – that “broader stakeholders” would benefit – still seems questionable. reality is, corporate purposes and values damn, they just accepted a slightly higher offer.
When it was acquired, in fairness, Vectura was reshaping its business to become a contract development and manufacturing organization, using its experience on behalf of other pharmaceutical companies. This was something the PMI said it wanted to continue and should show growth by now, according to analyst estimates at the time.
But PMI was also clear that it wanted to develop new products, such as inhaled painkillers. Vectura, which is managed separately, has invested in research and development, plans a new one “Inhalation center of excellence” in Bristol, and took on a new boss at Novartis when its chief executive officer and chief financial officer left last year.
This remains minuscule in its overall change offering. Just as oil and gas companies are pushing towards renewable energy and biofuels (not fire or flood mitigation), the group is trying to reinvent itself with less harmful alternatives to cigarettes, such as vaporizers, heated sticks of tobacco and its $15.7 billion purchase of a nicotine pouch maker Swedish match last year. You are increasingly starving the fuel business. Its smoke-free revenues went from virtually zero in 2015 to a third of the total. (Welfare is less than 1% rounding error). She supports tougher public policies for smoking cessation.
For a company that seems to enjoy arguing, PMI is on stronger ground when it argues that regulation and bans in some markets on lower-risk alternatives, motivated in part by suspicion from the tobacco industry, are prolonging smoking cigarette.
Olczak last month indicated success of countries such as Japan and Sweden in the transition of smokers from cigarettes to alternatives. Reduced-harm options are controversial but pose fewer health risks. A systematic review of the evidence found that vaporizers are more effective at helping smokers quit than nicotine patches or gum, something that has informed UK government policy (while rightly cracking down on their use by smokers). children). The tobacco industry, or at least a portion of it, has a legitimate claim to expertise in developing products that smokers will actually use and getting them to try them.
This is the debate that PMI’s overhaul needs to win, rather than be reborn as a wellness group. The group this year sold its stake in vaccine maker Medicago suggesting its involvement was holding back the company’s progress. Business transformation activity cannot be rushed.
https://www.ft.com/content/cc3c6611-a632-426b-82ec-43cac3bd1ec6
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