Tag: Philip Morris International

Altria Banned From Importing IQOS Into U.S.

Photo: Kuznietsov Dmitriy
The U.S. Trade Representative has upheld the International Trade Commission’s (ITC) finding that Philip Morris International’s IQOS tobacco heating device infringes on patents held by British American Tobacco, reports The Winston-Salem Journal.
As a result of the ITC ruling, Philip Morris USA is barred from importing PMI’s IQOS 2.4, IQOS 3, IQOS 3 Duo heat-not-burn traditional cigarette products. It also was ordered to halt future sales of those products—marketed as Marlboro HeatSticks—already in the U.S.
Some retailers of the Marlboro HeatSticks, including convenience stores, already had displayed notifications to customers that those products could no longer be sold as of Monday.
“Today’s announcement provides a measure of success for our enforcement of intellectual property rights to ensure we can continue to innovate, as is common practice among innovation-based industries,” Gareth Cooper, BAT’s assistant general counsel, said in a statement. “As we have strenuously noted, there was no reason to overturn the policy.”
Altria said expressed disappointment with the decision. “We continue to believe that the plaintiff’s patents are invalid and that IQOS does not infringe on those patents,” the company said in a statement.
“The ITC’s importation ban makes the product unavailable for all consumers who have switched to IQOS, reduces the options for the over 20 million smokers looking for alternatives to cigarettes, and ultimately is detrimental to the public health.”
This sentiment was echoed by Gregory Conley, president of American Vaping Association, at the time of the ITC’s Sept. 30 decision.
“By potentially denying them the opportunity to switch to a harm reduction production IQOS, the real losers of this protracted court battle could end up being American adult smokers,” Conley said.
“While some may use vaping, snus, or pouches in the absence of IQOS, far too many American adults will choose to just smoke cigarettes instead.”
The U.S. Food and Drug Administration authorized IQOS for sale in April 2019. The products debuted in test markets in Atlanta in October 2019 and Richmond, Virginia, in November 2019. During the second quarter, PM USA expanded retail distribution of Marlboro HeatSticks into the Triad and other metro areas of North Carolina, as well as northern Virginia and Georgia.
Altria will likely appeal to the U.S. Court of Appeals for the Federal Circuit, which handles patent lawsuits. That process could take up to a year to reach a decision, with the likelihood of a successful appeal not favorable, according to industry analysts.
In the worst-case scenario for Altria and Philip Morris, the two companies would have to go back to the drawing board, moving production to the U.S. or changing up the design enough to avoid patent infringement claims.
PMI has successfully defended similar cases in the U.K. and elsewhere. BAT has already pursued litigation over IQOS in Poland, the Czech Republic, Bulgaria, Romania and Greece and through the European Patent Office.
November 30, 2021
Confusion About Alternatives Preventing Cessation

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Confusion about smokefree alternatives is preventing many smokers from quitting smoking according to a global survey, reports Arab News.
Commissioned by Philip Morris International and conducted by Povaddo, the study surveyed nearly 30,000 people in 26 countries. The researchers found that many adult smokers remain unaware that alternatives to cigarettes exist, are unable to access them, or are confused by conflicting information that prevents them from making an informed choice.
The survey showed that despite the science backing up smokefree alternatives, there was public confusion surrounding these products, such as heated tobacco products or e-cigarettes.
Thirty-three percent of the respondents cited a lack of information about how these products differ from cigarettes and 35 percent said they were unsure about the science behind these new products.
The survey found that 32 percent of smokers have easier access to cigarettes and so don’t switch to alternatives.
“The findings of the survey show there is confusion about smokefree products. For those adults who would otherwise continue to smoke cigarettes, having access to evidence-based information about smoke-free products is critical,” said Tarkan Demirbas, area vice-president for the Middle East at PMI.
According to the World Health Organization, there are more than 1 billion smokers in the world today, and this number is expected to stay steady until 2025.
November 22, 2021
PMI Makes Case for U.S. Sales of IQOS at FDA

Credit: Aidman
Philip Morris International met with the U.S. Food and Drug Administration on Nov. 5 to present its argument for why the multinational and Altria Group should be allowed to import and sell the IQOS tobacco-heating device in the U.S., reports CNBC.
According to a CNBC source, PMI told the FDA that IQOS is unique in its ability to transition smokers away from combustible cigarettes, which the company says are more harmful to health than tobacco-heating devices.
In late September, the International Trade Commission ruled that IQOS infringed on two of Reynolds’ patents. The Biden administration is conducting an administrative review until Nov. 29 to decide if the sale and import of the cigarette alternative will be banned.
During the FDA meeting, PMI reportedly argued that the ITC overstepped its bounds, given that the FDA is in charge of regulating which tobacco products can be sold.
The U.S. Trade Representative will make a recommendation to President Joe Biden after listening to input from a number of agencies, including the FDA, which regulates tobacco products.
If the administration sides with R.J. Reynolds in the dispute, IQOS could be off of U.S. shelves for months as it waits for a decision on a separate claim from Reynolds with the U.S. Patent and Trademark Office.
PMI has successfully defended similar cases in the U.K. and elsewhere. BAT has already pursued litigation over IQOS in Poland, the Czech Republic, Bulgaria, Romania and Greece and through the European Patent Office.
In the worst-case scenario for Altria and Philip Morris, the two companies would have to go back to the drawing board, moving production to the U.S. or changing up the design enough to avoid patent infringement claims.
November 10, 2021
PMI Applauds U.K. Plan to Simplify E-Cig Licensing

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Philip Morris International announced its support of the U.K. government’s plan to simplify the pathway to license electronic cigarettes and other inhaled nicotine-containing products as medicines in England.
“The U.K. already has one of Europe’s lowest smoking rates, supported by a high rate of smokers who have switched to better alternatives,” the company wrote in a press note. “This proposal makes the U.K. the first country in the world to encourage the medical licensing of e-cigarettes via prescription as a route to further lower smoking rates, particularly among low-income smokers.”
“The U.K. is a global leader in medicine, science and public health,” said PMI’s senior vice president, of external affairs, Gregoire Verdeaux. “Expert scientific reviews in the U.K. and U.S. are clear that smoke-free alternatives—such as e-cigarettes—offer adults who would otherwise continue to smoke cigarettes a better alternative. We welcome the U.K. government’s continued recognition that regulated e-cigarettes and other inhaled nicotine-containing products, while not risk-free, are less harmful than smoking and can significantly benefit public health.”
PMI said regulators can decisively accelerate the decline of smoking through risk-proportionate regulations for all nicotine-containing consumer products. A growing number of countries—including the U.S., New Zealand, Italy, Portugal, Greece and Bulgaria—have recognized this approach and implemented differentiated regulation for noncombustible alternatives, according to the company.
November 3, 2021
ITC: IQOS Infringes on BAT Patents, U.S. Sales to End

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The International Trade Commission (ITC) has upheld an initial determination from May 2021 that Philip Morris International’s IQOS device infringes on two patents owned by BAT subsidiary Reynolds American Inc. (RAI).
The agency has instituted an import ban and a cease-and-desist order preventing IQOS consumables and devices from being sold in the U.S. in 60 days. PMI’s U.S. partner, Altria Group, plans to continue to sell IQOS through the 60-day period in its existing markets.
BAT welcomed the ruling. “Infringement of our intellectual property undermines our ability to invest and innovate and thereby reduce the health impact of our business,” the company wrote in a statement. “We will therefore defend our IP robustly across the globe.”
The patents relate to an electronically powered device with a heater to generate an aerosol and expire in October 2026 and November 2031. BAT has filed similar cases globally, including in Germany, the U.K., Japan and Italy.
Morgan Stanley said the ruling would have limited financial impact on PMI and Altria, as IQOS in the U.S. is not a meaningful contributor to the companies’ earnings. The outcome of similar cases brought by BAT against PMI internationally, however, could have a greater impact. But so far, PMI has been successful defending cases in the U.K. and Greece.
The investment bank also noted that the IQOS ban applies to imported product, suggesting it may be overcome by shifting production to the U.S.
The ITC decision will now be reviewed by the U.S. Trade Representative. If the decision is not vetoed within 60 days (only a handful have ever been vetoed), it can be appealed to the U.S. Court of Appeals, but the import ban would still be in effect throughout an appeals process.
September 30, 2021
PMI Opens Vapor Recycling Center in Budapest

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Philip Morris International inaugurated a HUF3 billion ($10.16 million) e-cigarette recycling center on the outskirts of Budapest this week, reports the Budapest Business Journal, citing state news wire MTI.
The center can recycle 150,000 electric tobacco devices a month, but capacity can be increased, according to PMI sustainability director Miguel Coleta said.
The company picked the site because of Hungary’s economic stability and the favorable investment environment, he added.
State secretary Tamas Menczer said the investment created 100 jobs, noting that PMI has just one other recycling center, in Japan.
PMI earned more than HUF230 billion in Hungary last year.

August 31, 2021
PMI Launches ‘Cleaner’ Bladeless IQOS in Japan

Photo: Kuznietsov Dmitriy
Philip Morris International has launched IQOS Iluma, the brand’s first tobacco-heating system based on induction-heating technology, in Japan.
The device’s Smartcore induction system heats the tobacco from within the new Terea Smartcore Stick. These newly designed sticks are to be used only with IQOS Iluma, which features an auto-start function that detects when the Terea stick is inserted and automatically turns on the device.
According to PMI, the bladeless IQOS devices offer a cleaner way to heat tobacco from the core without burning it. They also provide a more consistent experience and leave no tobacco residue, eliminating the need to clean the device. Additionally, the devices generate no combustion and no smoke. PMI says its market research indicates that IQOS Iluma provides a more pleasurable experience compared to previous IQOS generations.
“IQOS Iluma is our most innovative offering to date and the new flagship in our portfolio of science-backed, smoke-free products. Its breakthrough induction-heating technology heats tobacco from within, without burning, so there’s no smoke, no ash and, like previous IQOS devices, it emits, on average, 95 percent lower levels of harmful chemicals compared with cigarettes,” said Michele Cattoni, vice president of heated-tobacco platforms at PMI, in a statement.
“However, unlike our previous tobacco-heating systems, IQOS Iluma has no blade. That means no tobacco residue or cleaning—ever. With this, and other product features, we aim to address consumer pain points that may have hindered some adult smokers from beginning or maintaining their journey away from cigarettes in the past.”
IQOS Iluma is available in two versions—IQOS Iluma Prime and IQOS Iluma. Both devices use new induction-heating technology but offer different designs. IQOS Iluma Prime and IQOS Iluma are available in Japan for pre-order on IQOS.com beginning Aug. 17, 2021, and for purchase at IQOS stores on Aug. 18, 2021.
As of June 30, 2021, PMI’s smoke-free products are available in 67 markets. The company has stated its ambition to be present in 100 markets with its smoke-free products by 2025. There are more than 20 million users of the IQOS tobacco-heating system globally, and PMI estimates that more than 73 percent (approximately 14.7 million) of these men and women have switched completely to IQOS and stopped smoking with the balance in various stages of switching. PMI’s ambition is that by 2025, at least 40 million PMI cigarette smokers who would otherwise continue to smoke will have switched to smoke-free products. Furthermore, the company’s ambition is that more than half of its net revenues will come from smoke-free products by 2025.
August 17, 2021
IQOS Pauses Expansion After Patent Ruling

Photo: Kuznietsov Dmitriy
Philip Morris USA has paused U.S. expansion of its IQOS heat-not-burn (HnB) cigarettes following an unfavorable U.S. International Trade Commission (ITC) ruling, reports The Winston-Salem Journal, citing the company’s second-quarter report.
In April 2020, British American Tobacco subsidiaries R.J. Reynolds Tobacco Co., RAI Strategic Holdings and R.J. Reynolds Vapor Co. filed a patent infringement lawsuit against Philip Morris USA.
The complaint focuses on three HnB technology patents held by the company. An additional two patents are involved in a separate legal proceeding before the patent and trademark office.
In May, an ITC administrative law judge found that the IQOS system infringes two of the plaintiff’s patents and recommended imposition of a ban on the importation of the IQOS system.
On July 27, the ITC accepted review of the administrative law judge’s findings and recommendations on certain issues, including issues relating to the patent infringement claims and potential remedies, including a ban on the importation of the IQOS electronic device, Marlboro HeatSticks and component parts into the United States and on the sale of any such products previously imported into the United States.
The ITC’s ultimate order is subject to review by the U.S. Trade Representative and federal court. Due to this uncertainty, PM USA has delayed further expansion of IQOS and Marlboro HeatSticks.
IQOS is the only HnB product authorized for sale in the U.S., where it is sold by Altria. Last year, the U.S. Food and Drug Administration allowed the company to market IQOS as reducing consumers’ exposure to harmful chemicals found in cigarettes.
The IQOS products debuted in test markets in Atlanta, Georgia, in October 2019 and Richmond, Virginia, in November 2019.
During the second quarter, PM USA expanded retail distribution of Marlboro HeatSticks into the Triad and other metro areas of North Carolina as well as northern Virginia and Georgia.
The expansion contributed to Marlboro HeatSticks’ retail sales volume jumping by nearly 40 percent, including reaching a 0.8 percent market share for overall cigarettes in Atlanta as well as 0.5 percent in Charlotte.
July 30, 2021
IQOS Driving Momentum and Opportunity for PMI

Jacek Olczak
Presenting at the Goldman Sachs Global Staples Forum on May 18, Philip Morris International CEO Jacek Olczak highlighted the next steps in the company’s strategy to becoming a majority smoke-free company in terms of net revenue by 2025.
Olczak highlighted IQOS’ strong and accelerating topline momentum and potentially lucrative opportunities to expand beyond nicotine into broader lifestyle/wellness markets, such as high-margin botanicals and respiratory drug delivery.
IQOS added more than 1.5 million users in the first quarter of 2021, according to Olczak—well above its historical average of 1 million new users per quarter. Robust conversions at 70 percent to 80 percent continue to dwarf the average conversion rates of many vapor products, which are in the mid-teens.
The heat-not-burn device is now available in 66 markets, with a user base of 19.1 million, of which 14 million have stopped smoking and fully converted to IQOS.
Olczak was particularly excited about the launch, scheduled for the second half of 2021, of PMI’s ILUMA IQOS product, which he believes could drive even higher conversion rates and margins as PMI continues to leverage its fixed cost base on IQOS while streamlining its customer acquisition and retention.
Olczak also reviewed management’s ongoing efforts to digitalize and simplify business processes, including PMI’s commercialization strategies around IQOS. According to him, these efforts have already yielded $60 million of gross savings in selling, general and administrative expenses toward management’s target of $1 billion in 2021–2023.
Olczak believes that PMI’s digitalization efforts will not only further reduce the cost of acquiring and retaining new users and ultimately drive more profitable growth but also accelerate conversion and customer acquisition, especially with the eventual global rollout of PMI’s digital customer experience.
Olczak also touched on PMI’s longer term opportunities beyond heat-not-burn and vaping, including nicotine pouches and next-generation devices.
Management is also looking into adjacencies, such as broader lifestyle/wellness markets, such as high-margin botanicals (including pure CBD) and respiratory drug delivery. The company aspires to achieve at least $1 billion in incremental net revenue from its beyond nicotine efforts by 2025.
Olczak expressed optimism about PMI’s competitive advantages in terms of its capabilities around product safety and efficacy and validating/substantiating scientific claims.
May 19, 2021
Trade Commission: IQOS Infringes on Vuse Patents

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Philip Morris International’s IQOS device infringes two patents owned by British American Tobacco subsidiary Reynolds American Inc., reports Bloomberg, citing a note posted by Judge Clark Cheney on the U.S. International Trade Commission’s website.
The next step is a likely review by the full commission, which has the power to halt products at the U.S. border and is scheduled to complete the investigation by Sept. 15.
IQOS is the only heat-not-burn product authorized for sale in the U.S., where it’s sold by Altria. Last year, the U.S. Food and Drug Administration allowed the company to market IQOS as reducing consumers’ exposure to harmful chemicals found in cigarettes.
Reynolds claims PMI and Altria copied patented technology that it had developed for its Vuse Vibe and Vuse Solo vaping products, for which it’s filed for FDA approval. The company complained to the ITC in April 2020.
Altria responded with its own patent-infringement claims, and a separate suit against Reynolds in May. Altria also lodged petitions with the U.S. Patent and Trademark Office challenging the validity of a half-dozen Reynolds’ patents.

The judge has to make a determination on whether even temporarily removing such products is appropriate for public health and what alternatives there are for consumers.
Andre Calantzopoulos, executive chairman, PMI
Reynolds said it expects the judge will recommend an import ban, adding that the unauthorized use of its inventions “undermines our ability to invest and innovate and thereby reduce the health impact of our business.”
Philip Morris called the judge’s findings “one step in a long process that does not have an immediate effect” and it will present its position to the commission.
“BAT’s litigation in the U.S. is part of a worldwide attempt—which has been entirely unsuccessful to date—that is meant to undermine the heated-tobacco segment, where they lag far behind,” the company said.
PMI has also argued that, even if a patent violation is found, it’s not in the public’s interest to keep the IQOS out of the U.S.
“The judge has to make a determination on whether even temporarily removing such products is appropriate for public health and what alternatives there are for consumers,” said PMI Executive Chairman Andre Calantzopoulos. “If we remove a product that exists, and the only alternative that people have are cigarettes, it’s a consideration of public-health interest and that has to be taken into account.”
May 18, 2021