Philip Morris to Start Next Round of Studies for New Tobacco Products

Philip Morris International Inc. is starting a round of medical studies for new tobacco products, with ideas to market those products as soon as 2016.

In June 2012, the manufacturer of Marlboro and L&M cigarettes, commenced to promote the evolution of next-generation products that can provide new methods to consume nicotine. The project comes as consumers are demonstrating a greater motivation to try alternatives to regular cigarettes, including snus and e-cigarettes.

Philip Morris Brands

Cigarette brands of Philip Morris

“We are starting eight medical studies in different areas and with various population groups and intend to extend the testing in 2014,” said Chief Financial Officer Jacek Olczak.

Mr. Olczak said a discovery medical study presented in 2012 gave top-line outcomes that were based on the company’s expectations and modeling. He said Philip Morris will also start behavioral research to identify how smokers understand the new products Philip Morris is creating. That study will be used for marketing aims.

To produce those products, Philip Morris is evaluating sites in Europe and could build several facilities for the project. Philip Morris expects to invest EUR500 million to EUR600 million over a three-year period.

Experts have said Philip Morris has a good track record when it goes to new-product production, aiming to success the company has had offering capsule products.

The new-product production comes as industrywide cigarette volume has slipped in Europe, especially in southern European countries, where there is high unemployment. Philip Morris has looked for increasing exposure to growing markets, especially in Asia, where adult populations are rising.

Altria Group, which offers Marlboro and L&M products only in the U.S., told that domestic tobacco consumers were also seeking to alternative products. The domestic market has seen stronger demand for smokeless tobacco and cigars nowadays, while shipments of regular cigarettes have dropped.

“The company is carefully supervising adult tobacco consumer interest in alternative tobacco products, and our tobacco companies are functioning internally and through partnerships to create novel new products for them,” said Altria Chief Executive Marty Barrington.

Shares of Philip Morris increased 0.9 percent to $92.11 in recent trading, while Altria grows 0.5 percent to $34.94.

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