Name: Philip Morris International CEO: 'We want to stop selling cigarettes'
Uploaded: 2022-09-21
Duration: 9 min 56 s
Description: The company famous for its Marlboros is now expanding into health and wellness products.

The company famous for its Marlboros is now expanding into health and wellness products.

Philip Morris International CEO: "We want to stop selling cigarettes"

Photograph Courtesy Philip Morris International

Leadership

Philip Morris CEO: "We want to stop selling cigarettes"

Yeah. So good of you to come by to talk to us about Philip Morris International. You know, when people think of Philip Morris, they think Marlboro cigarettes, but what they may not know is you're now expanding into wellness and health products. Tell us why you decided to move in this direction? Well, we have been building capabilities inside the company for the last decade or more actually, well, we've been a very focused on a developing products which are not safer to use than than regular cigarettes, the famous Marlboro. And we also realize that we have built a very unique set of assets inside the company which we can repurpose for our purposes. And it happened that this is in the territory of wellness and health care, which I admit it is not the first thing which will, you know, cross anybody's mind that the tobacco company can go as far as as into the wellness and health care. Yeah, it does seem like an odd fit that cigarette and tobacco company would get into health and wellness. Yes, but if you think more into with more into the details in order to develop the safer products to cigarettes, we had to really master the inhalation, okay, how smoke is delivered to the human lungs, how the aerosol is delivered to human lungs. And we actually built quite a lot of knowledge how the human respiratory system works. So this is how the knowledge about the human respiratory system I believe will serve us very well in developing the new product. You've already made several small Acquisitions that specialize in inhalation and respiratory medicines. And you said that you plan to invest $200 million 2025 we will achieve a $1 billion dollars from the revenues from the sales of this product. For me, it's not only that important that $1 billion 2025, but with we put a few products into the commercialization, we proved that we have a capability And you know in the business, once you achieve your first billion dollars, then you have $2 billion, $4 billion $31 billion dollars and most of that comes from your cigarette side of the business. How big do you think that the number Will be 5, 10 years from now? It can be very big. Um seven years ago when we started our smoke free part of the business as a replacement for cigarettes. We had literally $0 of revenue. And I fast forward seven years later, 30% of my total 30 billion is already generated by smoke food products. So it's always important to have the courage to start the earlier. You start the earlier, I believe you will come to harvest the results. It can be a very big business for like you've acknowledged, there's been criticism from medical societies about these acquisitions that you've made so far and you haven't been happy about it. Tell us what bothers you. There is a bit of a debate in some circles that, you know, tobacco companies of Philip Morris shouldn't have a license to operate in the domain of the wellness and health care. But actually we're doing this for the well defined purpose. We really want to leave a cigarette behind us. We want to solve the problem of smoking hands. The whole er area of the products were developing as the alternative to cigarettes, but we also, we believe we can push the company into completely new territory when we will have a net positive contribution to the society. The fact that they have a history of cigarettes, which by the way, we acknowledge that we want to stop selling cigarettes. That we want to go away from the combustible products as we know where to go to the safer alternatives. Were actually trying to remedy the situation and the fact that, you know, the medical community is going to the patients and telling them that if the product is coming from the tobacco manufacturer, then you shouldn't use the product. There are people suffering, the people who need the solutions. I don't think it's actually more of the medical community also has been very troubled by Philip Morris's recent hire of a scientist and top regulator from the FDA, the Federal Drug Administration and they see it as a conflict of interest. How do you see that? It's not really a conflict of inferences, actually, you know, these are the people who have spent quite a big part of the career of their life in the pursuing the tobacco harm reductions in trying to contribute to the problem of smoking. And I'm actually very pleased that the former F. D. A. Employees um perceived Philip Morris as the company which can contribute into effect the advancement of achieving this objective. So I don't think it's a conflict of interest is actually parties who are thinking alike alike, who truly wants to solve the problem of smoking and joining forces. What kind of feedback are you getting from your own industry from other cigarette manufacturers? Are they supporting you? Not as much as one could think, but I think the industry from a very monolithically, you know, type of an industry focused only on cigarettes is going through the challenge of going smoke free. And also, you know, each of us in the industry is trying to start thinking more ahead of uh, ahead of the times and, you know, see what else these companies can be standing for. But well, let's make it very clear, none of us likes change. Okay, so we always confronted with a change usually at the beginning, we all go through the stage of denial, then we start building a knowledge, then we're getting more confortable from a business perspective who runs faster presumably wins the most and that's what PM is playing today. But you know, I don't have any hard feelings with the people, you know, industry member seven years ago were all against us and pretty normal human behavior. What do you think it'll take for Philip Morris to win credibility in healthcare and not just from the medical world, but from the public as well by delivering the products, but, you know, proving to people that were walking the talk that this is not the window dressing, these are the significant, therefore it's human and capital allocation wise, Which we devoting to this strategy and I believe the success will be the best proof that we were right. And this was the good for the society for investors, for employees of the company. Let's talk a little bit about your campaign to help smokers to stop smoking. You've just come out with a new ad campaign and the headline really gets your attention. Does the world want 1.1 bill people to stop smoking or not? It sounds like a call to action. It is, it's a little bit provocative and essentially, I'm asking everyone who can support, can contribute to sit together and design the world without the cigarettes. And I've said it on a number of occasions, not more than a 10 years country by country, we can leave the smoking behind us, but we need to all act together rather than I still pretend that the solutions do not exist. Science doesn't exist etcetera. Well you're here in new york to promote more support and U. N. General Assembly is meeting the opportunity of a lot of influential people who are here and you're reaching out to policymakers, regulators, public health advocates, tobacco companies to unite about bringing about the end of cigarette smoking. What are you expecting? A reaction to the? Well I do expect that will have at least the conversations that will listen to each other. But I believe the time is coming now when we should really reflect again of this great vast opportunity which was never in front of us uh which can change the world at least the word for this one billion people who otherwise will continue smoking cigarettes. And I think the solutions existed this and joint wheel of all stakeholders really can can make the miracle. Well you say in the ad quote, my company is doing its part now, we need others to step up to. You said a moment ago that you know that cigarettes are not good for health that you ultimately want to remove cigarettes, what are you waiting for? Well, if we do it just unilaterally as Philip Morris, I don't think the problem is going to be solved. I mean you have another players in the industry, you have all the illicit trade, the risk of illicit trade etcetera. But I think we can orchestrate the change and the world has seen a similar transformations in our product categories. Maybe the next step for Philip Morris is to do the healthy thing, which is to actually stop manufacturing cigarettes and we are ready to do so. We are ready to do so. But we have to do it in a way which is well designed and well orchestrated if you like. You know, it is a very challenging situation to get this kind of change that you're dealing with. What do you think you have to do as the ceo of one of the largest cigarette companies in the world? You have to do to really lead the way, continue with what we're doing. I think the progress and the number of internal external resources which we have put around this vision, this strategy, I think we just have to continue work hard every day, every week, every month and the rewards will come. They will achieve our our our success