Innovation in Tobacco Industry

Alina Frîncu

Director Reduced Risk Products

Philip Morris Trading, Romania

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1. A need for better

2. A ground breaking idea & working solution

3. Mass adoption

INNOVATION

Source: http://www.huffingtonpost.com/2013/08/20/myshelter-

foundation_n_3769375.html

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... global leader of tobacco industry

… present in 180 countries

… owner of 6 out of top15 leading global brands

… Marlboro, L&M, Parliament, Chesterfield

… operational center in Lausanne, Switzerland

Philip Morris International

…committed to innovation of tobacco products with harm reduction potential.

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Neuchatel,

Switzerland

Singapore

✓Over 300 world-class

scientists

✓ Investment of approximately

USD 3 billion

✓Over 8 years of R&D

activities

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Cigarette smoke contains 7000+ constituents…

…Many are recognized as harmful

…Most are formed by burning the tobacco

…Not known which are responsible for smoking-related

diseases

When Burning Tobacco…

!Approx 100 HPHCs

Harmful and Potentially

Harmful Constituents

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Harmful constituents

High LowTemperature

Target product

space

Reducing temperature reduces overall constituents

Reducing overall constituents seen as a promising avenue to reduce

risk (US Institute of Medicine)

>800°C <400°C

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Heating blade & specialized software maintains

tobacco temperature below combustion (<300 degrees)

Custom designed tobacco HEETS

Aerosol delivers volume, flavor and satisfaction

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Heating vs. Burning Tobacco

IQOS filter after usage Conventional cigarettes

filter after usage

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PMI Aspiration

Time

Dis

ea

se

Ris

k

Behavior change

We apply the US Institute of Medicine’s “gold standard” for assessing risk

reduction: comparability to cessation

Note: Reduced-Risk Products (RRPs) is the term we use to refer to products that have the potential to reduce individual risk and population harm

The descriptions in the chart are for illustrative purposes only

Source: IOM (Institute of Medicine), 2012, Scientific Standards for Studies on Modified Risk Tobacco Products. Washington, DC: The National Academies Press

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Note: Reduced-Risk Products (RRPs) is the term we use to refer to products that have the potential to reduce individual risk and population harm

The descriptions in the chart are for illustrative purposes only

Source: IOM (Institute of Medicine), 2012, Scientific Standards for Studies on Modified Risk Tobacco Products. Washington, DC: The National Academies Press

Non-Clinical

Studies

Aerosol Chemistry

Clinical Studies

Population Impact

Assessment

Post-Market

Surveillance

The Road to Substantiating Reduced Risk

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Nagoya(Japan) &

Milan (Italy)

Switzerland Bucharest (Romania)

Expansion in Japan & Italy

IN 20 COUNTRIES

Q4 2014 Q3 2015 Q4 2015 2016-NOW

IN 30-35 COUNTRIES

END 2017

Note: Reduced-Risk Products (“RRPs”) is a term PMI uses to refer to products that present, are likely to present, or have the potential to present less risk of harm to smokers who switch to these products versus continued smokingSourcing: PMI Financials or estimates

Innovation in Tobacco Industry

Q & A

Alina Frîncu

Director Reduced Risk Products

Philip Morris Trading, Romania