Smoke-Free Products Account for 30% of Philip Morris International’s Revenues

The total IQOS users globally reached 19.5 million, of which approximately 13.5 million had switched to the reduced risk alternative and stopped smoking. This represents an increase by 3.6 million or 22% versus September 30, 2021 according to the financial statements of Philip Morris International.

The market share for heated tobacco units in IQOS markets is up by 1.3 points to 7.7% on a pro forma basis. The net revenues from smoke-free products account for 30,4% of the total net revenues of the company and the market share of heated tobacco products in IQOS markets increased by 1.2 points to 7,6% on a proforma basis.*

“The company’s smoke-free transformation continues at a rapid pace, reinforcing our aim to become a majority smoke-free company by net revenues in 2025.”, commented Jacek Olczak, Chief Executive Officer of Philip Morris International, “IQOS’s excellent momentum continued in the last quarter.”, he added. “Heated tobacco unit volume and share grew across all key geographies, driven in part by ILUMA’s strong performance in initial launch markets.”, Olczak noted.

In addition to its third quarter financial results the company also announced another important news: as of April 30, 2024, Philip Morris International will have the full rights to commercialize IQOS in the U.S. This will occur following an agreement with Altria Group, Inc. to end the companies’ commercial relationship covering IQOS in the U.S. Since 2013 the two companies have had an agreement according to which Altria owned certain U.S. intellectual property rights related to the IQOS technology that were developed prior to PMI’s 2008 spin-off. Following IQOS’s authorization for sale in the U.S. in 2019, the agreement covered an initial 5-year commercialization term for the product through April 2024, with potential renewal – subject to certain performance milestones – covering a second 5-year term through April 2029.

“Today marks another historic milestone in our journey towards a smoke-free future,” Olczak pointed out. “This agreement provides a clear path to fulfilling the product’s full potential in the world’s largest smoke-free market, leveraging PMI’s full strategic and financial commitment to IQOS’s success.”

IQOS is the world’s leading smoke-free product, with strong growth achieved across a wide range of international markets. It established the innovative heat-not-burn category, driving its growth and becoming a $9 billion annual net revenue business outside the U.S. in 2021, some six years after its initial commercial launch.

The results for IQOS to date show that the world’s leading smoke-free product has strong growth achieved across a wide range of international markets. It established the innovative heat-not-burn category, driving its growth and becoming a $9 billion annual net revenue business outside the U.S. only six years after its initial commercial launch.

The device has achieved double-digit national shares across a number of Asian, European and other markets – all with varying demographic profiles and adult smoker taste preferences. IQOS has been available on the Bulgarian market for 5 years. The company prepares for US manufacturing, important regulatory submissions – including for launching ILUMA in the second half of 2023 – as well as for the development of U.S. sales, distribution, retail, consumer engagement and support capabilities over the next 18 months.

“We look forward to replicating our international success in fully switching adults who would otherwise continue to smoke, to better alternatives. According to 2022 U.S. Centres for Disease Control and Prevention (CDC) data, the U.S. is home to around 31 million adult smokers, and I believe that IQOS – the only inhalable smoke-free nicotine product to have received an MRTP Authorization from the U.S. Food and Drug Administration and thus be recognized as appropriate for the promotion of public health – can play a meaningful role in further reducing smoking rates.”, Jacek Olczak is positive.

*For a more accurate estimate the company is providing figures and comparisons on a pro forma basis, which exclude the company’s operations in Russia and Ukraine for all periods and provide a more comparable view of PMI’s business, the company notes.