Philip Morris International Invests in Next-Gen Products

Announces plans to build two plants in Italy to develop the products

Melissa Vonder Haar, Freelance Writer

André Calantzopoulos

André Calantzopoulos 

NEW YORK --Last week, Philip Morris International Inc. (PMI) announced its investment of up to €500 million (about $680 million) towards two manufacturing plants in Italy, which will be dedicated to producing potentially reduced-risk tobacco products.

According to an Associated Press report, both facilities are located near the city of Bologna--a pilot plant that will be used to produce products only for test markets and initial launches is nearly complete--while construction on a larger plant, which will eventually employ 600 people, will not be completed until 2016.

PMI predicts the two plants will produce a combined 30 billion reduced-risk units annually.

"The development and commercialization of reduced-risk products represents a significant step toward achieving the public health objective of harm reduction, a potential paradigm shift for the industry, and an important growth opportunity for PMI," André Calantzopoulos, PMI's CEO, said in a written statement. "This first factory investment is a milestone in our roadmap toward making these products available to adult smokers."

Those reduced-risk products include two cigarettes that heat tobacco instead of burning it: one heats tobacco with an electronic heater, one that uses a carbon heat source. The company announced plans to test at least one of these next-generation products in the second half of 2014 (although the specific test markets have not yet been announced), with a full rollout in 2015.

This announcement is just the latest in the company's expansion of reduced-risk products: last December, PMI was granted exclusive license to commercialize Altria Inc.'s e-vapor products internationally--in turn, Altria was given the exclusive license to commercialize the two heated next-gen products described above. (Altria could only market these products as less harmful if the FDA approved a Modified Risk Tobacco Product [MRTP] application.)

Though the company is optimistic about the potential for electronic cigarettes, Philip Morris International has repeatedly said it still believes these heated products will be more attractive to traditional cigarette smokers.