This week’s attention: 1. Philip Morris International, British American Tobacco, etc. are deploying new business areas other than combustible tobacco through the “Beyond Nicotine” strategy; 2. Frost & Sullivan and Philip Morris International published the latest paper, pointing out that HTP (Heated Tobacco) cumulatively promotes Japanese traditional Cigarette sales fell by more than 30%.

1. Philip Morris International, British American Tobacco, etc. are deploying new business areas other than combustible tobacco through the “Beyond Nicotine” strategy

With the tightening of tobacco regulatory measures around the world and the limited development of the traditional tobacco market, multinational tobacco companies such as Philip Morris International (PMI) and British American Tobacco (BAT) are adopting the “Beyond Nicotine” strategy to promote the development of combustible tobacco. Deploy in areas other than products and start the road of business transformation. Relevant measures include:

Enhance scientific research and innovation capabilities to research combustible tobacco substitutes: (1) British American Tobacco announced in September 2021 to set up an innovation laboratory and a digital transformation center in Trieste, Italy, and establish a new tobacco product production base and boutique sales stores, mainly Production of electronic cigarettes Vuse, modern snus Velo and heated cigarettes Glo, etc., covering an area of ​​about 20,000 square meters; BAT plans to invest 500 million euros in the innovation center within 5 years. (2) Philip Morris International announced in November 2021 that it would move its headquarters to Connecticut, the United States, and plans to build an innovation center here to support the “smoke-free future” strategy.

Explore the medicinal potential of tobacco and expand its healthcare business: (1) British American Tobacco acquired the Kentucky Bioprocessing Center in 2014, mainly engaged in vaccine research; established a new company KBio in 2022, engaged in plant protein technology research and exploration of rare diseases , infectious disease treatment. (2) Philip Morris International’s “Beyond Nicotine” strategy initially focused on respiratory delivery and botanical medicinal products, and successively acquired part of the equity of Canadian biopharmaceutical company Medicago (vaccine research), Ferdin Pharmaceuticals (liquefiable tablets, solid oral Inhaler), asthma inhaler maker Vectura (respiratory drug products); in addition, PMI recently acquired OtiTopic, an American respiratory drug company, which has developed inhalable acetylsalicylic acid for acute myocardial infarction. According to PMI, the company plans to contribute at least $1 billion in sales from new businesses by 2025.

Develop new products and deploy industrial hemp: In 2021, British American Tobacco launched the first aerosol cannabidiol product, Vuse CBD Zone, in Manchester, UK, and acquired a 19.9% stake in a Canadian cannabis manufacturing company for £126 million to acquire its cannabis Research and development technology; in addition, the company will open a research center in New Brunswick to develop next-generation cannabis products.

2. Frost & Sullivan and Philip Morris International published the latest paper, pointing out that HTP has driven the sales of traditional cigarettes in Japan to decline by more than 30%

A recent study by Frost & Sullivan and Philip Morris International (PMI) showed that the introduction of the heated tobacco(herbal heatsticks) product HTP into the Japanese market has driven a 34% drop in cigarette sales. Since Japan launched three heated tobacco products nationwide in 2014, the penetration rate of HTP in the total smoking population has reached 25%, reducing the amount of traditional tobacco smoking in Japan by 30% within 3-4 years; nicotine patches, etc. Nicotine replacement therapy (NRT) has not had the desired effect.