COVER STORY
2018: A PIVOTAL YEAR FOR TOBACCO From heat-not-burn products to various regulatory and legislative moves, times they are a changin’ By Renée M. Covino THREE DAYS INTO THE NEW YEAR,
USA Today put forth a dramatic tobacco headline: “Philip Morris says its New Year’s resolution is to give up cigarettes.” Clever, but what does it really mean? In a nutshell, the global tobacco giant is betting its future on cigarette alternatives. The Marlboro brand maker took out full-page ads in several United Kingdom newspapers stating that its 2018 ambition is to build a smoke-free future and eventually stop selling cigarettes. The company says it wants to help people quit smoking traditional cigarettes and to one day replace them with smoke-free alternatives like electronic cigarettes and heated tobacco products. iQOS is Philip Morris International’s widely publicized heat-not-burn product (HNB). It is currently under reduced-risk review by the Food and Drug Administration (FDA) for approval to be sold in the United States. At the end of January, the FDA’s Tobacco Products Scientific Advisory Committee discussed the iQOS application, which many believe will pave the way for the rise of reduced-risk products in the nation. The committee rejected PMI’s reduced-risk claims. However, the FDA is not required to follow the committee’s recommendations, and the agency’s review will continue —
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although there is no set timeline. iQOS has already been launched in cities in Canada, Colombia, Czech Republic, Denmark, France, Germany, Greece, Guatemala, Italy, Israel, Japan, Kazakhstan, Korea, Lithuania, Monaco, the Netherlands, New Zealand, Palestine, Poland, Portugal, Romania, Russia, Serbia, Slovak Republic, Slovenia, South Africa, Spain, Switzerland, Ukraine, the United Kingdom, and in some Duty Free shops. In early January, Wells Fargo Securities LLC went on record as saying that 2018 will be a “pivotal” year for the tobacco industry with multiple potential positive catalysts. One being the commercialization of iQOS as soon as February and the possibility of the FDA granting modified-risk status to iQOS in the second half of 2018. (Wells Fargo Securities also cited the impact of tax reform as another potential positive force.) iQOS seems to be getting the most analyst and media attention, but it is not the only tobacco product filed with the FDA for modified-risk review. Reynolds American Inc. is also “on the stick” with 18 modified risk applications for six different styles of its Camel Snus.
The Rise of Alternatives Alternatives are a big part of the upcoming tobacco picture, according to Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities. “The year 2017 was defined by several potentially game-changing new developments that should continue to play out in 2018, including increased focus on heat-not-burn