In the Face of Adversity Philip Morris is Confident Science and Technology will Prevail
Innovation could be the inadvertent victim of a proposed ban on e-cigarettes and alternative tobacco products in Hong Kong. While the government has stated innovation and technology are priority areas for Hong Kong, the Smoking (Public Health) (Amendment) Bill 2019 which bans the import, manufacture, sale, distribution, and advertising of alternative tobacco products could threaten a newly opened Research and Development facility.
In recent years, Philip Morris International (PMI), which owns six out of 15 of the world’s best-selling cigarette brands, including Marlboro, has shifted its business model to focus on the research and development (R&D) of alternative tobacco products and e-cigarettes with the intent of “designing a smoke-free future,” as expressed by the company’s tagline. PMI has invested over US$6 billion into the R&D of these products over the past decade.
PMI extended its R&D investment to Hong Kong in July 2018 with the opening of what it calls the E-Hub (Electronics Hub) facility in Wong Chuk Hang. Brett Cooper, General Manager for Philip Morris Hong Kong and Macau says, “We set up the e-Hub in Hong Kong and employ many local talents in electronic engineering and supply chain.”
The company’s most notable product is the non-combustible tobacco heating device, IQOS, which heats tobacco to a maximum of 350°C–below the 400°C burn threshold. There are claims that heat-not-burn (HNB) products are less harmful than cigarettes because fewer harmful or potentially harmful chemicals (HPHCs) are generated and inhaled by the user, compared to the combustion process of traditional cigarettes.
According to Cooper, PMI chose Hong Kong as the location for its R&D center due to the government’s efforts to encourage innovation as well as the supply chain efficiencies brought about by the city’s geographical proximity to the company’s manufacturing facilities in Zhuhai and Malaysia. The e-Hub handles all regional R&D testing of devices and over US$600 million worth of products were shipped through Hong Kong in 2018–a number that is on track to increase in 2019.
The approach from PMI was further consolidated following the comments last July 2018 where Chief Executive Carrie Lam expressed an interest to regulate alternative tobacco products saying “to go into a total ban of another form of tobacco product which is less harmful medically would raise many challenges.”
That all changed in October when the Government u-turned and announced a plan to impose a blanket ban on these products. Now, Philip Morris Asia Limited (PMAL) is asking the Hong Kong government to reevaluate its proposed ban.
At stake isn’t just the opportunity to sell their new products in Hong Kong, it’s the uncertain future of the company’s e-hub in which they’ve invested US$10 million to date.
But Cooper stressed that the company is still on course to continue operating it’s Hong Kong e-Hub, one of three research facilities under PMI; the other two are located in Switzerland and Singapore. In fact, they have plans to expand it.
“We’re still looking to hire more people and expand further here in Hong Kong. I have faith the government will see the benefit of such an innovative centre,” said Cooper.
The company is calling on the government to consider the growing scientific evidence around the reduced harm of alternative tobacco products. It cites over 260 peer-reviewed studies that have found such products to pose fewer health risks compared to their combustible counterparts.
More specifically, 30 independent scientific sources have found that HNB products release 90 to 95% fewer HPHCs compared to combustible cigarettes. PMAL also points to studies that have shown the efficacy of e-cigarettes in facilitating smoking cessation, such as “E-Cigarettes to Assist with Smoking Cessation” in the New England Journal of Medicine.
Second, PMAL argues that regulation–as opposed to a ban–will limit youth access to these products through illegal means, reduce illicit trade as a whole, and support legitimate businesses. Cooper said a ban would limit smokers’ access to less harmful alternatives should they choose not to quit.
“The reality is that the Government has estimated that 8.8% of the smoking population has been using these less harmful alternatives. That means approximately sixty thousand people will likely go back to smoking cigarettes,” says Cooper.
Cooper also notes that regulation would be in line with the benchmark set by the Organization for Economic Cooperation and Development (OECD), as 34 out of 42 OECD countries have introduced regulation. Of the 42 countries where IQOS is sold, 34 countries, including the UK, Germany, Japan, South Korea and New Zealand are signatories of the World Health Organization Framework Convention on Tobacco Control.
The company recently launched a petition supporting regulation of new tobacco products. When asked about the legality of the petition–an issue that the Hong Kong government is looking into–Cooper responded by saying that it is meant to be an educational platform to inform the public about the science behind alternative tobacco products. The first link on the website directs to the Hong Kong government’s own resource for smoking cessation.
He is optimistic about the move towards sensible regulation, stating that the petition has received support from over 30,000 adults from the public over the past few weeks. The LegCo’s views on The Smoking (Public Health) (Amendment) Bill 2019 are expected to come to light in the coming months.
Quote from Carrie Lam Speech at Asian Universities Alliance Summit 2019 Presidents Forum on April 14.
“Innovation and technology is a policy priority for my Government and an area of progressive growth and boundless promise for our universities. Hong Kong has what it takes to be successful in this field. To start with, we have world-class research capabilities.”
About the Author
James Kwan is Jumpstart’s Manag