Philip Morris International Inc · NYSE:PM
Philip Morris International — Investor Day (September 2018)
37 slides from Philip Morris International's investor day presentation, Sep 27, 2018
Slide 1: Investor Day
Investor Day Lausanne, September 27, 2018 Mirek Zielinski President, Science and Innovation
Slide 2: Investor Day (Video)
Investor Day Lausanne, September 27, 2018 Video (approximately 90 seconds)
Slide 3: Our IQOS Journey: Current Business Model
Our IQOS Journey: Current Business Model THE BEGINNING… Building the base • HeatControl TechnologyTM to replace tobacco combustion • Substantiated Risk Reduction • Sensorial satisfying nicotine containing aerosols for adult smoker acceptance and switching • IQOS pilot launch and expansion • Unpreced
Slide 4: Our IQOS Journey: Current Business Model
Our IQOS Journey: Current Business Model THE BEGINNING… …TODAY… Building the base Rock solid foundation • HeatControl TechnologyTM to replace • PMI clear leader in Reduced-Risk tobacco combustion Products (RRPs) ⎼ 5.8 million adult smokers have • Substantiated Risk Reduction stopped smoking and swit
Slide 5: Our IQOS Journey: New Business Model
Our IQOS Journey: New Business Model THE BEGINNING… …TODAY… …TOMORROW Building the base Rock solid foundation Sustainable Leadership and Growth • HeatControl TechnologyTM to replace • PMI clear leader in Reduced-Risk • Ecosystem portfolio supporting a tobacco combustion Products (RRPs) better life f
Slide 6: Rock Solid Foundation for New Business Model
Rock Solid Foundation for New Business Model • Infrastructure in place to support our new business model and deliver our IQOS promise: ⎼ Scientific discoveries, substantiation and portfolio innovation ⎼ New technologies, engineering solutions and manufacturing capacity ⎼ Regulatory recognition, prod
Slide 7: Totality of Scientific Evidence: Presents Less Risk of Harm
Totality of Scientific Evidence: Presents Less Risk of Harm • Totality of evidence(a) to-date shows that switching completely to Platform 1 (IQOS), although not risk free, presents less risk of harm than continuing to smoke • We are hopeful for a decision on our PMT application by year end and the s
Slide 8: 6-month Clinical Exposure Response Study Confirms the Risk Reduction Potential of Platform 1 (IQOS)
6-month Clinical Exposure Response Study Confirms the Risk Reduction Potential of Platform 1 (IQOS) • We have supplemented our MRTP application with the results of a 6-month clinical Exposure Response Study • The clinical study met its primary objective: ⎼ All co-primary endpoints shift in the same
Slide 9: First-Ever In Vivo Lung Cancer Study on Smoke-Free Tobacco Product Alternative
First-Ever In Vivo Lung Cancer Study on Smoke-Free Tobacco Product Alternative Supporting Risk Reduction Occurrence of Lung Carcinoma • 18-month in vivo A/J mouse lung cancer study N: 75 75 74 75 72 118 97 showed very positive results: 1 0 0 C a r c in o m a 8 0 S E M ) 6 0 (a) In c id e n c e o f L
Slide 10: Post-Market Studies Addressing Prevalence and Gateway Risk
Post-Market Studies Addressing Prevalence and Gateway Risk Japan Cross-Sectional Survey Results from December 2016 (Wave 1) to July 2017 (Wave 4) • 98% of current IQOS consumers were previously using other tobacco products(a) • 75.1% converted to IQOS(b) • 18.5% prevalence (adult consumers who have
Slide 11: Broadening Scientifically Validated Consumer Benefits
Broadening Scientifically Validated Consumer Benefits • We continue to broaden our existing catalog of scientifically validated consumer benefits that clearly differentiate the improvements from switching to RRPs vs. continued smoking. These include: ⎼ Hygiene ⎼ Indoor air quality ⎼ Reduced emission
Slide 12: Heated Tobacco Category: Increasing Recognition (U.S.)
Heated Tobacco Category: Increasing Recognition (U.S.) U.S. FDA’s New Plan for Tobacco and Nicotine Regulation (July 28, 2017) "Looking at ways to reduce nicotine levels in cigarettes so that they are minimally or non-addictive, while not altering the nicotine content of noncombustible products such
Slide 13: Heated Tobacco Category: Evolving Regulatory Environment
Heated Tobacco Category: Evolving Regulatory Environment May 5, 2018 Announced plans to August 12, 2017 consider how best to Passed secondary apply risk-proportionate legislation for Novel regulation to all tobacco Russia Tobacco Products Ukraine and vaping products U.K. July 1, 2017 Italy March 1,
Slide 14: Critical Importance of Product Standards
Critical Importance of Product Standards • PMI advocates for the introduction of standards for heat-not-burn and e-vapor products: ⎼ Smoke-free categorization (absence of combustion and smoke) ⎼ Product design, manufacturing controls, testing protocols and distribution ⎼ Substantiation of product be
Slide 15: Leverage Learnings from Switching Consumers
Leverage Learnings from Switching Consumers Switched Users IQOS Markets • Significant learnings from 5.8 million adult (in millions) consumers across 43 markets who have stopped smoking and switched to IQOS(a): 5.8 43 ⎼ Consumer journey ⎼ Consumer delights and addressing pain points • Consumer delig
Slide 16: Product and Quality Program Advances
Product and Quality Program Advances IQOS 2.4 Plus Product Return Ratio in Japan • Experiences from ~ 500 billion (Index: per manufacturing quarter, per number of months in market) puffs • Product design improvements 100 Q2’17 ⎼ Latch 80 Q3’17 ⎼ Electronics • Manufacturing automation and 60 process
Slide 17: Redefined Care Program
Redefined Care Program • Building care culture and capabilities • Strengthening of infrastructure and digital capabilities • E-commerce capabilities and scale • Continued focus on optimizing replacement lead-times • Service and cost enhancements from digital and consumer care infrastructure Inbound
Slide 18: RRPs: Highest Standards of Responsibility for the Category
RRPs: Highest Standards of Responsibility for the Category 18
Slide 19: PMI Innovation Machine
PMI Innovation Machine Technology, Human Responsible Engineering and insights & business Manufacturing behavioral practices research Scientific discoveries, evidence packages and Brand retail, Experience bridging customer care marketing strategies & E-commerce Societal Digital understanding Design a
Slide 20: Consumer Needs Continue to Inform Portfolio Innovation
Consumer Needs Continue to Inform Portfolio Innovation • Adult consumers are looking for products to fit their lifestyle and situational needs • Meta needs relate to hygiene and the potential of risk reduction • Adult smokers articulate needs for different offerings: ⎼ Tobacco taste with a progressi
Slide 21: RRPs: Science and Innovation Based Brand Portfolio
RRPs: Science and Innovation Based Brand Portfolio BRAND (4 PLATFORMS) CURRENT PLATFORM OFFERS IQOS 2.4 Plus Version 1 IQOS MESH IQOS 3 & IQOS 3 Multi INNOVATION PIPELINE 2 2 2 2 Next Gen Next Gen Next Gen Next Gen CONSUMABLES TM TM TM TM Note: The products depicted are subject to ongoing developmen
Slide 22: IQOS MESH: Experience and Performance Design
IQOS MESH: Experience and Performance Design • Launched in London on July 30, 2018 Reliability • Co-existence of Platforms 1 and 4 Convenience • 11 signature flavors Sensorial delight Nicotine satisfaction "You know what? I like this device. Once again IQOS have done a very good job in terms of maki
Slide 23: IQOS MESH: Consistent Vape, No Burnt Taste
IQOS MESH: Consistent Vape, No Burnt Taste E-Liquid Average formaldehyde level per puff ng / puff IQOS MESH 16,000 14,000 12,000 MESH Heater Open System 10,000 8,000 6,000 4,000 Wick and Coil E-cigarette 2,000 Closed System 0 IQOS MESH % e-liquid depletion New After 10 tank refills Source: PMI Resea
Slide 24: IQOS MESH: Innovation Focus
IQOS MESH: Innovation Focus No. of Puffs x TPM (plume) • Balancing device size, nicotine concentration and = Daily liquid consumption number of puffs Cig-a-like Target to achieve cigarette 200 mAh equivalent daily nicotine levels Note: Bubble size represents battery size Nicotine concentration in e-
Slide 25: IQOS MESH: Innovation Focus
IQOS MESH: Innovation Focus No. of Puffs x TPM (plume) • Balancing device size, nicotine concentration and = Daily liquid consumption number of puffs Coil & Wick 900 mAh Cig-a-like Target to achieve cigarette 200 mAh equivalent daily nicotine levels Note: Bubble size represents battery size Nicotine
Slide 26: IQOS MESH: Innovation Focus
IQOS MESH: Innovation Focus No. of Puffs x TPM (plume) • Balancing device size, nicotine concentration and = Daily liquid consumption number of puffs Big vape MOD’s ~ 2000 mAh Coil & Wick 900 mAh US competitor Cig-a-like 200 mAh Target to achieve cigarette 200 mAh equivalent daily nicotine levels No
Slide 27: IQOS MESH: Innovation Focus
IQOS MESH: Innovation Focus No. of Puffs x TPM (plume) • Balancing device size, nicotine concentration and = Daily liquid consumption number of puffs EU TPD limit Big vape • EU: 20 mg per ml limit on nicotine content in liquid MOD’s ~ 2000 mAh Coil & Wick 900 mAh US competitor Cig-a-like 200 mAh Tar
Slide 28: IQOS MESH: Innovation Focus
IQOS MESH: Innovation Focus No. of Puffs x TPM (plume) • Balancing device size, nicotine concentration and = Daily liquid consumption number of puffs EU TPD limit Big vape • EU: 20 mg per ml limit on nicotine content in liquid MOD’s ~ 2000 mAh • MESH technology with ~30% more vape compared to coil &
Slide 29: IQOS MESH: Innovation Focus
IQOS MESH: Innovation Focus No. of Puffs x TPM (plume) • Balancing device size, nicotine concentration and = Daily liquid consumption number of puffs EU TPD limit Big vape • EU: 20 mg per ml limit on nicotine content in liquid MOD’s ~ 2000 mAh • MESH technology with ~30% more vape compared to coil &
Slide 30: Potential of Platforms 3 and 2
Potential of Platforms 3 and 2 Platform 3 (STEEM) Platform 2 (TEEPS) • Unique innovative product proposition • Scientific assessment: • Advanced novel nicotine salt technology ⎼ Reduced formation and reduced exposure results comparable to Platform 1 without vaping clouds • Dominican Republic pilot c
Slide 31: IQOS Platform 1: The Journey Continues
IQOS IQOSPlatform Platform1– 1: The The Journey Journey Continues Ahead A Journey of a Thousand Miles Begins With a Single Step - Lao Tzu 31
Slide 32: Platform 1: Progressive New Product Introductions
Platform 1: Progressive New Product Introductions IQOS 3 & IQOS 3 Multi Nagoya and Milan Pilots 2016 2017 2018 onwards (2014) Product Reliability and Product Reliability and Continued Innovation Improvements Improvements • Aesthetics • Aesthetics • New design language • Automatic blade • Reinforced
Slide 33: Platform 1: Expanded Heated Tobacco Unit Variants
Platform 1: Expanded Heated Tobacco Unit Variants 33
Slide 34: Ecosystem of Lifestyle Experiences
Ecosystem of Lifestyle Experiences Device Brand Retail, PoS Customer Portfolio of New & E-commerce Care & Generation Interaction Accessories On the go In the car At home At work 34
Slide 35: Investor Day (Video)
Investor Day Lausanne, September 27, 2018 Video (approximately 90 seconds)
Slide 36: Summary
Summary • IQOS will lead the transformation of adult smokers out of combustion • Significant category potential demonstrated by IQOS’ unrivaled conversion rates • We will continue to build consumer comprehension of relevant benefits and seek regulatory understanding and support • Rock solid foundati
Slide 37: Investor Day
Investor Day Lausanne, September 27, 2018
Philip Morris International — Investor Day (September 2018) on 6ix