launched its potentially reduced-risk tobacco product, iQOS, in the UK on November 30th. This product is a black pen-shaped device that heats tobacco, instead of burning it, in an effort to reduce the harmful effects of smoking. Since it heats the tobacco, it generates no smoke or ash, just a vapor containing nicotine. This device is already available for sale in over a dozen markets, including Japan, Italy, and Switzerland. Chief Executive Andre Calantzopoulos also claimed that conventional cigarettes could become a thing of the past, and predicted a «phase-out period» for cigarettes. The new iQOS product, with fewer toxins, could eventually replace cigarettes in the long term.
iQOS is the result of more than a decade of research on a range of potentially reduced-risk products, which can prove to be an alternative to traditional cigarettes. The research, conducted by over 430 scientists in Philip Morris’ R&D facilities in Switzerland, involved an investment of $3 billion by the company. According to the company’s research, the device yields on average, less than 10% of the harmful constituents found in cigarette smoke. However, despite the growing awareness and publicity with regards to vaporizers and e-cigarettes, this segment still remains an insignificant part of tobacco firms’ income. PMI also expects its Reduced Risk Products (RRPs) to approach break-even OCI (Operating Companies Income) in 2017, and to start contributing positively by 2018. The company is targeting 30 to 50 billion units in incremental volume through RRPs, which would add an additional OCI of $0.7 billion to $1.2 billion by 2020, with an increasing confidence of reaching the upper end of the target range.
Fuente: Seeking Alpha
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