IQOS e-cigarettes will not return to the U.S. market in 2022

Blue Hole New Consumption Report, February 24 news, according to foreign news reports, in the past year, IQOS has experienced ups and downs, this heated non-burning tobacco product was first introduced to the US market in October 2019.

IQOS is an electronic device that heats tobacco-filled rods wrapped in paper to produce an aerosol containing nicotine. Under an exclusive license agreement with Philip Morris International (PMI), the Philip Morris USA subsidiary of the Altria Group of Companies has been commercializing IQOS and Marlboro HeatSticks in the United States.

In the first quarter of 2021, PM USA introduced new IQOS 3 devices to all current markets and brought new products to the Northern Virginia market in the middle of the year. In addition, as of the end of April, Marlboro HeatSticks was available at statewide retail stores in Georgia, Virginia, North Carolina and South Carolina.

Altria CEO Billy Gifford noted on the company's most recent fourth-quarter and full-year 2021 earnings call that the team has made excellent progress in the Northern Virginia market, with Marlboro HeatSticks reaching a 1.9 percent retail share of the cigarette category at dealerships in October.

However, in November, the U.S. Prime Minister had to remove IQOS from the market due to the U.S. International Trade Commission's (ITC) import ban and cease-and-desist order. As reported at the time, the ITC ruled that Philip Morris International and Olchia must stop selling and importing the product.

The September 29 ruling, which took effect two months later, followed the discovery that IQOS infringed Reynolds American Inc's patents.

"Currently, we don't expect to be able to use IQOS devices or Marlboro HeatSticks in 2022," Gifford said. "However, we remain focused on bringing IQOS to market as quickly as possible, our team is actively working on re-entry plans, and we hope to be ready to bring IQOS back to U.S. consumers when it becomes available."

In a recent interview with American Transportation Magazine, Jacek Olczak, CEO of Philip Morris International, said the company will start producing IQOS in the U.S. in an attempt to get the product back on the shelves next year.

The ITC's decision gives PMI the option to produce products domestically or adjust the design. However, according to the report, the design change would require re-authorization from the U.S. Food and Drug Administration (FDA).

"From the very beginning we entered the FDA, we considered that IQOS would one day not only be sold in the United States, but manufactured there, if you consider the size of the market and the opportunities for IQOS," Olczak told The American Transportation Magazine. "It's just happening faster because of the ITC's decision."

PMI did not disclose where it will be manufactured in the U.S., but said it plans to start selling IQOS again in the first half of 2023.

PMI and Altria first entered into an agreement in December 2013 focused on alternative tobacco products. The original agreement set out a strategic framework for commercializing low-risk products and e-cigarettes. In July 2015, the two companies expanded the agreement to include joint research, development and technology sharing agreements.

According to Gifford, Altria's PM USA needs two milestones to maintain its exclusive licensing and distribution rights to IQOS in the U.S. and to receive an additional five-year renewal option.

"The initial five-year term doesn't expire until April 2024, but we believe PM USA has reached these milestones based on IQOS' performance in Charlotte, NC, and Northern Virginia markets," he said. "PMI has expressed disagreement with our position. We hope to continue to discuss these issues with PMI."

"We strongly believe that heated tobacco products can play an important role in reducing harm in the United States, and we are continuing our efforts to support the growth of this category," Gifford continued. "We gained important knowledge from our IQOS commercialization efforts, and we hope to use that knowledge in the future."

Key experiences include the need to educate U.S. smokers about a new tobacco category, and his need to support smokers in transitioning to smokeless alternatives.

Gifford says: "We have demonstrated improved performance in each successive market and gained valuable knowledge to transition smokers using MRTP to improve the Risk Tobacco Product Declaration. In addition, we have established a robust post-market surveillance system – all of which we believe will enable us to successfully achieve our goal of getting rid of smoking."

In addition to PM USA, Richmond-based Altria Group Inc. Other wholly owned subsidiaries include US Smokeless Tobacco Co. LLC and John Middleton Co. Altria's non-flammable portfolio includes on! Manufacturer Helix Innovations LLC. Exclusive commercialization rights for oral nicotine bags, IQOS tobacco heating systems and Marlboro HeatSticks in the United States, as well as for Juul Labs Inc. equity investment.